Drain Your Brain, a local video arcade, is considering the addition of a new virtual reality system. Several different vendors have been contacted. The owner of the arcade, affectionately referred to by the patrons as Wizard, has narrowed his selection to one of three choices (mutually exclusive alternatives). The data below describes the three systems under evaluation. Annual costs are based on electricity consumed, replacement parts based on use, and preventive maintenance. Revenue estimates are provided by the vendors based on regional data and relative thrill as compared to other arcade games and a cost of $1.00 per play.

	System A	System B	System C
Investment	$13,000	$11,000	$15,000
Net Annual Cash Flow	$4,200	$4,200	$4,700
Salvage Value	$2,000	$1,000	$2,000
Useful life	5 years	4 years	6 years

Which method (PW, AW, FW, IRR) would be best (easiest) to use to select the preferred alternative?

Question 1 options:

	AW
	FW
	PW
	IRR

Based on the correct answer to question 1, which system should be selected? (MARR = 12%)

	A
	B
	C
	None

Question 1: The answer is AW

Question 2: Can you solve it? The answer is NOT B.