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A company is evaluating four pieces of equipment that lower raw material requirements. The equipment chosen will have a useful life of 20 years and

A company is evaluating four pieces of equipment that lower raw material requirements. The equipment chosen will have a useful life of 20 years and the company has a MARR of 15%. Analyze the data and identify the initial and final defender (the machine to be chosen) with their respective values.

A

B

C

D

Initial Investment

$10,000

$18,000

$25,000

$30,000

Annual savings on materials

$4,000

$6,000

$7,500

$9,000

Annual cost of operation

$2,000

$3,000

$3,000

$4,000

  1. IRR(A)=19.426% and IRR(C)=17.254%
  2. IRR(A)=19.426% and IRR(D)=15.777%
  3. IRR(A)=19.426% and IRR(C)=15.777%
  4. IRR(A)=19.426% and IRR(B)=15.777%
  5. None of the above

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