Reference no: EM131351686
A firm is considering an investment in a numerical controlled milling machine needed for an eight (8) year project life. Three alternatives are under consideration. The firm uses a 20% MARR. The cash flows of the alternatives are as follows:
Cash Flow .... A .... B .... C
Initial cost .... $22,000 .... $35,000 .... $24,000
O & M costs / year .... $ 3,000 .... $ 2,750 .... $ 1,100
Annual cost savings .... $10,500 .... $11,500 .... $ 9,000
Salvage value .... $ 5,825 .... $ 7,150 .... $ 8,000
Technical life – years .... 4 .... 8 .... 4
Using incremental rate of return analysis, determine which alternative the firm should select.
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: A firm is considering an investment in a numerical controlled milling machine needed for an eight (8) year project life. Three alternatives are under consideration. The firm uses a 20% MARR. Using incremental rate of return analysis, determine which..
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