A corporation with $7 million in annual taxable income is considering two alternatives.

Before-Tax Cash Flow ($1000)

Year	Alt. 1	Alt. 2
0	-$10,000	-$20,000
1-10	4500	4,500
11-20	0	4,500

Both alternatives will be depreciated by straight-line depreciation assuming a 10-year depreciable life and no salvage value. Neither alternative will be replaced at the end of its useful life. If the corporation has a minimum attractive rate of return of 10% after taxes, which alternative should it choose? Solve the problem by:

(a) Present worth analysis

(b) Annual cash flow analysis

(c) Rate of return analysis

(d) Future worth analysis

(e) Benefit-cost ratio analysis

Hints:

You are asked to solve this using MARR = 10% BEFORE taxes

IGNORE: Taxable Income, depreciation

DON'T IGNORE: Salvage = 0, Neither alternative will be replaced at the end of its life.

	Alternative 1	Alternative 2	Increment Alternative 2-1
a) P =
b) A =
c) IRR =
d) F =
e) B-C =

Which alternative did you select? Explain.

**Can not use excel functions; Please show work/explain how to achieve results**