8-28 A firm is considering three mutually exclusive alter- natives as part of a production improvement pro- A gram. The alternatives are as follows: A В Installed cost $10,000 $15,000 $20,000 1,625 Uniform annual benefit 1,625 1,890 Useful life, in years 10 20 20 For each alternative, the salvage value at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a) Construct a choice table for interest rates from 0% to 100%. (b) The MARR is 6%. If the analysis period is 20 vears which alternative should be selected?
8-28 A firm is considering three mutually exclusive alter- natives as part of a production improvement pro- A gram. The alternatives are as follows: A В Installed cost $10,000 $15,000 $20,000 1,625 Uniform annual benefit 1,625 1,890 Useful life, in years 10 20 20 For each alternative, the salvage value at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a) Construct a choice table for interest rates from 0% to 100%. (b) The MARR is 6%. If the analysis period is 20 vears which alternative should be selected?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 10E
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