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Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value.
Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher 1 requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher 2 requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher 3 requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/year. Show the comparisons and internal rates of return used to make your decision: Comparison 1: IRR 1: Comparison 2: Polisher 1 versus Polisher 3 IRR 2: % No polisher versus Polisher 2 Comparison 3: No polisher versus Polisher 1 IRR 3: % Polisher 2 versus Polisher 3 No polisher versus Polisher 3 Polisher 1 versus Polisher 2 Based on an internal rate of return analysis, which polisher should be recommended? Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is 0.2
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