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B. However, you are contemplating the purchase of a different supplement that boost your savageness rather than confidence. Both alternatives will accomplish the same task
B. However, you are contemplating the purchase of a different supplement that boost your savageness rather than confidence. Both alternatives will accomplish the same task but the Confidence boost supplement is substantially more expensive than the Savageness boost supplement and will not have to be replaced for 10 years, whereas the savageness boost supplement will need to be replaced in just 5 years. The cost of purchasing the 2 systems and the costs of operating them and their experienced lives are as follows: YEAR 0 1 2 3 Confidence (1,400,000) (25,000) (30,000) (30,000) (30,000) (40,000) (40,000) (40,000) (40,000) (40,000) (40,000) Savageness (800,000) (50,000) (50,000) (60,000) (60,000) (80,000) 4 5 6 7 8 9 10 a. Templeton typically evaluates investments in plant improvements using a 9% required rate of return. What are the NPVs of the 2 systems? b. Calculate the equivalent annual costs for the 2 systems. C. Based on your analysis of the two systems using both their NPV and EAC/EAA, which system do you recommend the company to pick & why
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