MARR of mutually exclusive alternatives
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Following are the cash flows and a MARR of five mutually exclusive alternatives (only one can be chosen).
MARR = 14%
Year 0 1 2 3 4 5
Alternative A ($3,000) $500 $750 $1,100 $1,500 $1,200
Alternative B ($5,700) $1,100 $1,500 $2,000 $2,500 $2,150
Alternative C ($1,000) $300 $400 $500 $400 $300
Alternative D ($7,500) $1,800 $2,500 $2,500 $2,500 $1,000
Alternative E ($8,000) $4,000 $2,000 $2,000 $2,000 $1,500
a. Using the Present Worth criterion, which alternative should be accepted?
b. Using the Internal Rate of Return criterion, which alternative should be accepted?
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Solution Summary
This problem examines two alternative investment options, and provides decision criteria for each
Solution Preview
Following are the figures and calculations:
Project NPV ROR
A 2050 68.3%
B 3550 ...
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