Question: x. Solve this problem using the incremental Benefit - Cost ration with, expected life of 10 years and rate of return of 10% Alternative A

x.

Solve this problem using the incremental Benefit - Cost ration with, expected life of 10 years and rate of return of 10%

Alternative A

Initial cost $50,000

Annual maintenance cost $4,000

Estimated annual benefit $10,000

Alternative B

Initial cost $30,000

Annual maintenance cost $3,000

Estimated annual benefit $9,000

a.

Select B with B/C = 1.14
b.

Select B with B/C = 0.14
c.

Reject A with B/C = 1.14
d.

Select A with B/C =1.14

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