Question: Carp, Inc. wants to evaluate two methods of shipping their products. The following cash flows are associated with the alternatives: Use an interest rate of

Carp, Inc. wants to evaluate two methods of shipping their products. The following cash flows are associated with the alternatives: Use an interest rate of 15% and annual cash flow analysis to decide which is the most desirable alternative?

$1,700,000 29,000 First cost $700,000 Maintenance and 18,000 operating costs + Cost gradient (begin Year 1) Annual benef

$1,700,000 29,000 First cost $700,000 Maintenance and 18,000 operating costs + Cost gradient (begin Year 1) Annual benefit +750/yr +900/yr 303,000 154,000 142,000 Saivage value Useful life, in years 210,000 10 20

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