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4. (20 P, 20 min) A company wants to purchase a new extractor. There are three alternatives that provide the same rate production. The data

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4. (20 P, 20 min) A company wants to purchase a new extractor. There are three alternatives that provide the same rate production. The data for the three alternatives are as followed: Fixed capital investment Sum of annual operating and fixed costs Scrap value Alternative 1 Alternative 2 Alternative 3 $100,000 $150,000 $180,000 $20,000 $18,000 $12,000 $2,000 $3,000 $4,000 Service life 7 10 10 Assume the income tax rate is 25%, and straight-line depreciation method is used for both methods. If the minimum acceptable rate of return is 8%, which of the alternatives should be selected

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