Which alternative should be chosen

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Reference no: EM131061594

A company is considering the purchase and installation of a pump which will deliver oil at a faster rate than the pump already in use. The purchase and installation of the larger pump will require an immediate layout of $1600, but it will recover all the cost by the end of one year. The relevant cash flows have been established as follows:

Explain the values given for the discounted-cash-flow rate of return and net present worth. If the company requires a minimum rate of return of 10 percent, which alternative should be chosen?

Reference no: EM131061594

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