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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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