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Orpheum Productions in Nevada is considering three mutually exclusive alternatives for lighting enhancements to one of its recording studios. Each enhancement will increase revenues by
Orpheum Productions in Nevada is considering three mutually exclusive alternatives for lighting enhancements to one of its recording studios. Each enhancement will increase revenues by attracting directors who prefer this lighting style. The cash flow details, in thousands of dollars, for these enhancements are shown in the chart below. MARR is 10%/year.
End of Year | Light Bar | Sliding Spots | Reflected Beam |
0 | -$10,000 | -$18,000 | -$28,000 |
1 | $4,000 | $3,600 | $0 |
2 | $4,000 | $3,600 | $3,500 |
3 | $4,000 | $3,600 | $7,000 |
4 | $4,000 | $3,600 | $10,500 |
5 | $4,000 | $3,600 | $14,000 |
6 | $4,000 | $3,600 | $17,500 |
Based on an annual worth analysis, which alternative (if any) should be implemented?
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