Determine which alternative the firm should select

Reference no: EM13219919

A firm is considering an investment in a robotic transfer cell. Three alternatives are under consideration, each with a 5-year technological life. The firm uses a 15% MARR. The cash flows of the alternatives are as follows: Cash Flow A B C Initial cost $15,000 $27,500 $22,500 O & M costs / year $ 1,600 $ 375 $ 1,100 Annual cost savings $ 7,000 $ 9,500 $ 9,000 Salvage value $ 3,000 $ 7,250 $ 4,500 Using incremental rate of return analysis, determine which alternative the firm should select.

Reference no: EM13219919

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