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IRR or Present Worth

6. Three mutually exclusive alternatives requiring different investment levels are being considered. The life of all three is 20 years with no salvage value. The MARR is 15%.
Al A2 A3
Investment $ 60,000 $ 30,000 $ 100,000
Cash flow per year $ 10,692 $ 6,162 $ 17,000
Return on total inv. 17.1% 20.0% 16.1%

Find the alternative that should be selected using IRR or Present Worth on the incremental investment. (One or the other, your choice.)

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Solution Summary

IRR or Present Worth is applied.

$2.19