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5. (25 points) The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your

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5. (25 points) The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Annual Salvage Life, Cost Benefit Value years Option 1 $42,000 $10,000 $4,000 4 Option 2 $45,000 $11,500 $4,200 6

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