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A firm is considering two mutually exclusive alternatives as part of an upgrade to its supply chain management system. The cash flow information is presented
A firm is considering two mutually exclusive alternatives as part of an upgrade to its supply chain management system. The cash flow information is presented below. Based on a 20-year study period and 10% MARR, use the incremental ERR method to determine which alternative is the most economical. Alternative A: Installation cost = $84,000 Net annual revenue = $13,125 Salvage value = 0 Useful life = 20 years IRR = 14.6% Alternative B: Installation cost = $180,000 Net annual revenue = $27,000 Salvage value = 0 Useful life = 20 years IRR = 13.9% 2) What is the incremental ERR of the delta cash flow? Write the answer in percentage value without % sign. For example if the ERR is 12.34% write 12.34 A firm is considering two mutually exclusive alternatives as part of an upgrade to its supply chain management system. The cash flow information is presented below. Based on a 20-year study period and 10% MARR, use the incremental ERR method to determine which alternative is the most economical. Alternative A: Installation cost = $84,000 Net annual revenue = $13,125 Salvage value = 0 Useful life = 20 years IRR = 14.6% Alternative B: Installation cost = $180,000 Net annual revenue = $27,000 Salvage value = 0 Useful life = 20 years IRR = 13.9% 2) What is the incremental ERR of the delta cash flow? Write the answer in percentage value without % sign. For example if the ERR is 12.34% write 12.34
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