A company is considering two alternative methods of producing a new product. Based on the information given, decide which method the company should adopt. See Excel file for details.

A company is considering two alternative methods of producing a new product. The relevant data concerning the alternatives appear below: Alternative Alternative Initial investment Annual receipts Annual disbursements $64,000 S50,000 $20,000 $120,000 $60,000 $12,000 $16,000 S20,000 Annual depreciation Expected life Salvage value 4 0 0 At the end of the useful life of whatever equipment is chosen the product will be discontinued. The company's tax rate is 50 percent and the discount rate is 10 percent a. Calculate the net present value of each alternative b. Calculate the benefit cost ratio for each alternative c. Calculate the internal rate of return for each alternative d. If the company is not under capital rationing which alternative should be chosen? Why? e. Again assuming no capital rationing, suppose the company plans to produce the product indefinitely rather than quit when the f. If the company is experiencing severe capital rationing, and plans to terminate production when the equipment wears out, would