How to use pw method to rank-order economic attractiveness

Reference no: EM13212262

A stem cell research project requires expensive specialized laboratory equipment. For this purpose, three pieces of equipment and their associated cash flows (listed below) are under consideration. One piece of equipment must be selected, and the laboratory's MARR is 15% per
year.

EOY AT 0 ---> A=$136,500 - B=$84,000 - C=$126,000
EOY AT 1-4 ---> A=$12,500 - B=$31,500 - C=$15,500
EOY AT 5 ----> A=$15,000 - B=$31,500 - C=$15,500

a. Use the PW method to rank-order the economic attractiveness of the three projects.
b. Determine the interest rate at which the laboratory would be indifferent between Equipment B and Equipment C.

Reference no: EM13212262

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