Reference no: EM131081499
Option A: initial cost of $420,000, annual savings of $98,000, salvage of $20,000, useful life of 6 years
Option B: initial cost of $495,000, annual savings of $98,000, a one-time saving of $170,000 in year 3, salvage of $180,000, useful life of 4 years
Option C: initial cost of $260,000, annual savings of $79,000, salvage of $89,000, useful life of 3 years
Option D: initial cost of $330,000, annual savings of $155,000, salvage of $90,000, useful life of 2 years
What option should be chosen if MARR = 12%? What is the IRR for the incremental investment? Use your calculated IRR to justify whether or not your chosen option is still the correct one if the MARR is 21%
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