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A company must purchase one reactor to be used in an overall operation. Four reactors have been designed, all of which are equally capable of
A company must purchase one reactor to be used in an overall operation. Four reactors have been designed, all of which are equally capable of giving the required service. The following data apply to the four designs:
If the company demands a 15% return after taxes on any unnecessary investments, which of the four designs should be accepted?
Design 1 $10,000 Fixed-Capital Investment Sum of after-tax $3,000 operating and fixed costs per year (all other costs are constant) Design 2 $12,000 $2,800 Design 3 $14,000 $2,350 Design 4 $16,000 $2,100
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