Compute the payback period for Project considering MARR

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Reference no: EM13919341

Two mutually exclusive projects are being considered and one of them must be selected. Project A requires an initial investment of $500,000, annual O&M costs of 200,000, and will have a useful life of 8 years. Project B requires an initial investment of $800,000, annual O&M costs of 150,000, and will have a useful life of 9 years. The salvage value of the equipment used in each project at the end of their respective useful lives is $50,000 and $40,000, respectively.

a. Compute the payback period for Project A considering a MARR of 15%.

b. Compute the payback period for Project B considering a MARR of 15%.

Minimum acceptable rate of return = MARR

I need steps and cash flows diagrams.

Reference no: EM13919341

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