Question
Advanced Coffee Cup must choose between two sintering ovens for their new product line. Both ovens have a life expectancy of 8 years and the
Advanced Coffee Cup must choose between two sintering ovens for their new product line. Both ovens have a life expectancy of 8 years and the cash flows associated with them in the below table. Assuming a MARR of 13%. State below the percent incremental rate of return (two decimal places, e.g. 8.33%) between the two ovens. Based on the percent incremental rate of return, state below which oven should be selected and why?
| Ovens | Sure-Fired | Easy-Bake |
| First Cost | $450,000 | $615,000 |
| Annual Oper. & Maint. Costs | $15,000 | $10,000 |
| Annual Benefit | $85,000 | $158,000 |
| Salvage Value | $45,000 | $65,000 |
Answer (Incremental IRR):
Answer (Selection/Why):
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