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A firm is considering three mutually exclusive alternatives as part of a protection improvement programme. The relevant data is as follows: Item Alternative A Alternative
A firm is considering three mutually exclusive alternatives as part of a protection improvement programme. The relevant data is as follows:
Item | Alternative A | Alternative B | Alternative C |
Machine | 10,000 | 15,000 | 20,000 |
Installation cost | 2,000 | 3,000 | 3,000 |
Salvage value | 1,000 | 0 | 2,000 |
Uniform annual benefit | 1,825 | 1,825 | 2,090 |
Useful life (years) | 10 | 20 | 20 |
At the end of 10 years, alternative A could be replaced by a copy of itself that has identical cost and benefits. The MARR is 6%.
- If the analysis period is 20 years, which alternative should be selected?
- How much can the machine cost increase for the alternative (answer in (a)) still be the first best alternative?
Please show a complete manual calculation calculation not excel and include formula
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