1. A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows:

A B C

Installed Cost ($) 10,000 15,000 20,000

Uniform Annual benefit ($) 1,625 1,625 2000

Useful life (Years) 20 20 20

For each alternative, the salvage value is zero. The MARR is 6%. Which alternative should be selected based on the INCREMENTAL ANALYSIS method?

Please use P/F and P/A compound interest table to solve this problem.

(P/F, 6%, 20) = .3118

(P/A, 6%,20) = 11.470