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A construction company is planning to invest for the purchase of a heavy construction equipment which will be used at a construction site. There are
A construction company is planning to invest for the purchase of a heavy construction equipment which will be used at a construction site. There are three feasible alternatives and the detailed cash ow of all the alternatives are presented in the table. Each alternative has the useil life of 8 years. If the company's M is 12% per year, use an appropriate rate of return method to determine which alternative, if any, the company should choose. Alternatives Initial investment Annual saving Salvage value Useful life $ $ $ Years 2 son can 525 can T10 can 3 2mm 64mm 860 mm _ 24mm] 415 000 590 000 _
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