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Alternative X has a first cost of $5 million and an annual maintenance cost of $20, 000. Alternative Y has a first cost of $7
Alternative X has a first cost of $5 million and an annual maintenance cost of $20, 000. Alternative Y has a first cost of $7 million, a maintenance cost of $40, 000 and periodic expenditures of $100, 000 every five years, if both alternatives have infinite lives, the equation that will yield the rate of return on the incremental investment is: 0 = -$2 million + 160, 000/i + 100, 000(A/F,i,5)/i 0 = -$2 million + 160, 000/i - 100, 000(A/F,i,5)/i 0 = -$2 million + 160, 000/i + 100, 000(P/F,i,5) 0 = -$2 million + 160, 000/i + 100, 000(A/F,i,5)
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