Andrews Manufacturing offers three models for one of its products to its

customers. You have been asked to analyze the choices from the

customers perspective. Which model should a customer choose if each

model has a life of 12 years? Doing nothing is an alternative.

Do not use excel.

Alternative

Deluxe Regular Economy

First cost $220,000 $125,000 $75,000

Annual benefit 79,000 43,000 28,000

Maintenance and operating costs 38,000 13,000 8,000

Salvage value 16,000 6,900 3,000

MARR = 15%. Using incremental rate of return analysis, which

alternative, if any, should the customer choose