Comparisons-internal rates of return used to make decision

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Reference no: EM131998452

Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher 1 requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher 2 requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher 3 requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/year.

Show the comparisons and internal rates of return used to make your decision

Comparison 1: Polisher 1 vs Polisher 2 , IRR 1:

Comparison 2: Polisher 1 vs Polisher 3, IRR 2:

Comparison 3: Polisher 2 vs Polisher 3, IRR 3:

Comparison 4: No Polisher vs Polisher 1, IRR 4:

Comparison 5: No Polisher vs Polisher 2, IRR 5:

Comparison 6: No Polisher vs Polisher 3, IRR 6:

Reference no: EM131998452

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