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Engineering Management: A firm is considering the following alternatives, as well as a fifth choice: do nothing. Each alternative has a 5-year useful life Options
Engineering Management: A firm is considering the following alternatives, as well as a fifth choice: do nothing. Each alternative has a 5-year useful life
Options | 1 | 2 | 3 | 4 |
Initial Cost | $100,000 | $130,000 | $200,000 | $330,000 |
Uniform annual net income ($000s) | 26.38 | 38.78 | 47.48 | 91.55 |
Rate of return | 10% | 15% | 6% | 12% |
a) Construct a choice table for the interest rates from 0% to 100%
b) The firm's minimum attractive rate of return is 8%. Which alternative should be selected?
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