A company is considering several mutually exclusive ways that can meet a requirement

for a filling machine for its creamer line. One choice is to buy a machine. This would cost

$75 000 and last for six years with a salvage value of $12 000. Alternatively, it could

contract with a packaging supplier to get a machine free. In this case, the extra costs for

packaging supplies would amount to $17 500 per year over the six-year life (after which

the supplier gets the machine back with no salvage value for the company). The third

alternative is to buy a used machine for $40 000 with zero salvage value after six years.

The used machine has extra maintenance costs of $3500 in the first year, increasing by

$2500 per year. In all cases, there are installation costs of $8000 and revenues of $25000 per year.

a) Using the IRR method, determine which is the best alternative. The MARR is 10

percent

Need a full answer which includes the IRR values for all three alternatives!