Question: Two mutually exclusive alternatives are being considered by a profitable corporation with an annual taxable income between $5 million and $10 million. Before-Tax Cash Flow

Two mutually exclusive alternatives are being considered by a profitable corporation with an annual taxable income between $5 million and $10 million. Before-Tax Cash Flow

Year Alt. A Alt. B

0 -$3000 -$5000

1 1000 1000

2 1000 1200

3 1000 1400

4 1000 2600

5 1000 2800

Both alternatives have a 5-year useful and depreciable life and no salvage value. Alternative A would be depreciated by sum-of-years' -digits depreciation, and Alt. B by straight-line depreciation. If the MARR is 10% after taxes, 'Y which alternative should" be selected?

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