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A. Compare the following two alternatives on the basis of a future worth analysis using a MARR of 8%. Note that for future worth
A. Compare the following two alternatives on the basis of a future worth analysis using a MARR of 8%. Note that for future worth analysis, equal service requirement is mandatory. Delta Alpha First cost, $ 15,000 18,000 Annual operating cost 4,000 2,800 Salvage value, $ 2,000 1,000 Life, years 3 6 B. Just before an economic depression, an investor purchased a struggling company. The investor purchased the company when the company's books showed an annual net operating loss of $10,000,000. After pumping so much money into the company to restructure it, the business picked up and now shows an annual operating loss of only $5,800,000. The investor foresees this cash flow to continue for a while and plans to sell this and get out. A new investor just approached the owner of the business and made a proposal to buy the business for $150,000,000 within five years if the current cash flow remains unchanged from the previous five years. If the current cash flow started five years ago, approximately how many years from now should the owner accept the offer on the table to sell the business to make a MARR of 25 %.
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