A printed circuit board manufacturer will construct a new plant. The potential sites have the following estimates of income and cost. A plant on Site A would cost $30.4 million (mil) to build, produce $31.2 mil/year in revenues, $22.7 mil/year in expenses, and last 15 years. At Site B construction will cost $34.9 mil with $35.4 mil of revenues per year, $26.4 mil/year in expenses and will also last 15 years. Use the internal rate of return to determine which site should be selected. The MARR is 5% per year.

Which alternative would you choose as a base one?

Site A or Site B?

Analyze the difference between the base alternative and the second-choice alternative.

IRR (A/B-A/B)=?% Round to one decimal place

Witch alternative should be selected?

Site A or Site B?