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An organization is examining five mutually exclusive alternatives; Alpha, Beta, Gamma, Delta, and Epsilon. You can assume that each alternative represents a simple investment in
An organization is examining five mutually exclusive alternatives; Alpha, Beta, Gamma, Delta, and Epsilon. You can assume that each alternative represents a simple investment in which an initial investment is made in the present followed by uniform annual revenues for five years. The alternatives terminate simultaneously and at the same time of the last revenue is received (year 5). MARR = 12%. The results of feasibility analysis are summarized below: a) Provide estimates of values x_1, x_2, x_3, x_4, x_5, and y_1 in the previous table. Your estimate can be a choice of whether each value is greater than or less than MARR. You must support your estimates with explanation of how you reached this estimate. b) Using incremental analysis, select the best alternative. You must provide an explanation of how you reached this selection. c) Provide an estimate of the IRR of alternative Gamma (y_1 in the table). You must support your estimates with explanation of how you reached this estimate. d) Sketch the relationship between interest rate (horizontal axis) and NPW (vertical axis) for alternative Beta. On the same graph, sketch the same relationship but for alternative Gamma. Locate on this graph the point at which the two curves intersect. What are the coordinates of this point on this graph
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