Question: Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 5.5%/year. Based on the data below, perform an appropriate
Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 5.5%/year. Based on the data below, perform an appropriate analysis to select the most economical alternative. State your assumptions.
| Parameter | Alternative A | Alternative B |
| Initial Investment | $ 150,000 | $ 240,000 |
| Annual revenue (actual $) | $ 39,000 | $ 50,000 |
| Annual Cost (actual $) | $5000 in year 1 increasing by $500 each year for remaining years | $ 6,000 |
| Market value at end of useful life (year 0$) | $ 25,000 | $ 40,000 |
| Useful life, years | 6 | 8 |
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
