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A company wants to replace its AC unit, and they have two alternatives: 1) Purchase a new large AC unit for 20,000 SAR that will
A company wants to replace its AC unit, and they have two alternatives: 1) Purchase a new large AC unit for 20,000 SAR that will have a salvage value of 2000 after 15 years, the saving from this unit is 6500SAR/ year, or 2) Purchase two small AC units for 28,000 SAR (total) and the future salvage after 15 years is 3000 SAR, the saving from this unit is 8500SAR /year. If the MARR for these alternatives is 12%, find the followings: 1) The SPP using the simple payback analysis, 2) The future value of money for both alternatives. 3) Based on this analysis, which alternative do you recommend and why
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