Question
Ganymede Inc. has decided to acquire a new weather satellite. After considering several options it has narrowed its search to two satellites. Satellite Pluto: purchase
Ganymede Inc. has decided to acquire a new weather satellite. After considering several options it has narrowed its search to two satellites. Satellite Pluto: purchase cost of $306083 and operating costs of $26011 per year (paid at the end of each year). Satellite Triton: purchase cost of $180082 and operating costs of $61929 per year (paid at the end of each year). Both satellites have a service life of 14 years. Based on the defender-challenger approach and given that the MARR is 10%, reinvestment rate is 6%, and minimum external rate of return is 6%, compute the incremental external rate of return of choosing the most expensive satellite. Note: round your answer to two decimal places, and do not include spaces, percentage signs, plus or minus signs, nor commas. If your answer is 15%, write 15, not 0.15) Answer is 13.64 I just can't figure out the work.
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