6-21. Two mutually exclusive design alternatives are being considered for purchase. Doing nothing is also an option. The estimated cash flows for each alternative are given below. The MARR is 8% per year. Using the PW method, which alternative, if either, should be recommended? State your assumptions and your reasoning in arriving at a recommendation. (6.5)

Alternative 1 Alternative 2 Capital investment $18,000 $22,000 Annual revenues $9,000 $11,000 Annual expenses $2,900 $4,000 MV at end of useful life $2,000 $500 Useful life 4 years 12 years IRR 16.5% 30.6%