A corporation with $7 million in annual taxable income is considering two alternatives:

Before-Tax Cash Flow

Year                   Alt. 1                           Alt. 2

0                      -$10,000                  -$20,000

1-10                      4,500                       4,500

11-20                           0                       4,500

Both alternatives will be depreciated by straight-line depreciation assuming a l0-year depreciable life and no salvage value. Neither alternative is to be replaced at the end of its useful life. If the corporation has a minimum attractive rate of return of 10% after taxes, which alternative should it choose? Solve the problem by:

(a) Present worth analysis

(b) Annual cash flow analysis

(c) Rate of return analysis

(d) Future worth analysis

(e) Benefit-cost ratio analysis

(f) Any other method you choose