Unformatted text preview: Initial Investment 9,000 6,000 Annual Cashflow 2,400 1,600 Salvage Value 300 Useful Life 6 6 IRR 15.3% 16.1% Problem 2: Consider the three small mutually exclusive investment alternatives in the table below. The feasible alternative chosen must provide service for a 10-year period. The MARR is 12% per year and the market value of each is 0 at the end of the useful life. Which alternative should be chosen? A B C Initial Investment 2,000 8,000 20,000 Annual Revenues Less Expenses 600 2,200 3,600 Useful Life 5 5 10 Since the alternative chosen must provide 10 years of service, you can assume that investments A and B will be available for re-purchase at end of year 5. Use the Future Worth (year 10) Method, in comparing the alternatives....
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- Spring '11
- Hebrew numerals, initial investment, mutually exclusive alternatives, total revenue equation, exclusive investment alternatives