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2. A firm is considering an investment in a numerical controlled milling machine needed for a ten 10) year project life. Three alternatives are under
2. A firm is considering an investment in a numerical controlled milling machine needed for a ten 10) year project life. Three alternatives are under consideration. The firm uses an 18% MARR The cash flows of the alternatives are as follows: Cash Flow Initial cost O & M costs year 2,650 Annual cost savings 7,500 Salvage value Technical life -years C $23,250 1,100 S 6,500 S 7,900 AB $22,500 $17,200 S 2.750 S 7,500 S 6,125 $ 5,825 Using incremental rate of return analysis, determine which alternative the firm should elect
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