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Business, 28.07.2020 19:01 Skylar8826

Two mutually exclusive design alternatives are being considered for purchase. Doing nothing is also an option. The estimated cash flows for each alternative are given below The MARR is 8% per year. Using the PW method, which alternative, if either, should be recommended? State your assumptions and your reasoning in arriving at a recommendation. Alternative 1 Alternative 2
Capital investment $18,000 $22,000
Annual revenues $9,000 $11,000
Annual expenses $2,900 $4,000
MV at end of useful life $2.000 $500
Useful life 4 years 12 years
IRR 16.5% 30.6%

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