Two types of productivity programs are being considered for funding. Both have an initial cost of $10,000 for training equipment and consulting contracts. Program A promises to produce constant net revenues of $4,000 per year for 5 years. Net revenues from program B are expected to be $10,000 the first year and $2,000 per year for the next 4 years. All revenues are considered end-of-year receipts. a) Which program is preferable at MARR = 10%? b) Which program is preferable at MARR = 20%? c) Draw a graph of PW versus “i” (0%, 10%, 20%, and 30%) for the two proposals and state a decision rule for selecting between the two proposals.

Answer rating: 100% (QA)

a Program A is preferrable at 10 MARR MARR at 10 is Year 0 1 Year 1 111 09091 Year 2 0909111 08264 Year 3 0826411 07531 Year 4 0753111 0683 Year 5 068... View the full answer