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1. Two mutually exclusive alternatives, a flexible manufacturing cell and fixed automation, have different costand revenue characteristics as follows: Flexible Cell Fixed Automation Investment Life
1. Two mutually exclusive alternatives, a flexible manufacturing cell and fixed automation, have different costand revenue characteristics as follows: Flexible Cell Fixed Automation Investment Life Salvage value Gross cash savings $2,000,000 6 years $0 $800,000 in first year, increasing by $100,000 per year thereafter $300,000 per year $1,700,000 3 years SO $800,000 per year Cash disbursements $100,000 in first year, decreasing to $80,000 in second year and $70,000 in third year Minimum Attractive Rate of Retum (MARR) = 20 % pa. Study period = 6 years, assuming "repeatability" Using NPV, which alternative is preferred
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