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Problem 1 (24 points) A large food corporation is considering the development and production of three types of beverages, ranging juices to instant drinks. The
Problem 1 (24 points) A large food corporation is considering the development and production of three types of beverages, ranging juices to instant drinks. The type of markets, margins of proft, sales volume and technology needed are quite different in each case. The following summarizes the economic aspects of the projects Project 1Project 2 Project 3 $597,500 Equipment costs Installation costs $446,100 150,000 145,000 168,000 $435,700 200,000 250,000 Expected annual profits 212,000 If MARR is 12% and the projects' lives will be 6 years. a. What is the decision criterion? (2 pts) Which alternative is the most profitable? (16 pts) . Use b. flow diagram(s) and the necessary equivalent Remember to clearly show the cash model(s). (6 pts)
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