8-58. Two alternatives, A and B, are under consideration. Both have a life of five years. Alternative

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8-58. Two alternatives, A and B, are under consideration. Both have a life of five years. Alternative A needs an initial investment of $17,000 and provides a net revenue of $4,000 per year for five years. Alternative B requires an investment of $19,000 and has an annual net revenue of $5,000. All estimates are in actual dollars. Inflation is expected to be 2% per year for the next five years, and the inflation-free (real) MARR is 9.8% per year. Which alternative should be chosen? (8.2)

(a) Alternative A

(b) Alternative B

(c) Neither alternative

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Engineering Economy

ISBN: 9780134870069

17th Edition

Authors: William Sullivan, Elin Wicks, C Koelling

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