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5-6. An electronics company is trying to determine to which new product they should commit their limited capital resources. (There is not enough investment capital
5-6. An electronics company is trying to determine to which new product they should commit their limited capital resources. (There is not enough investment capital for both products. The in formation in the following table shows the esti mated net cash flow for each of the two proposed products: End of Year, k Product 2 2 Product 1 -- $150,000 50,000 50,000 50,000 50,000 12.6% -$520,000 30,000 130,000 230,000 330,000 11.0% 1 IRR If the MARR = 10% per year, show that the same project selection would be made with proper ap- plication of (a) the PW method, and (b) the IRR method. (5.4)
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