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Problem 3 The TT Racing and Performance Motor Corporation wishes to evaluate two alternative machines for NASCAR motor tune-ups. The MARR adopted by TT Racing
Problem 3 The TT Racing and Performance Motor Corporation wishes to evaluate two alternative machines for NASCAR motor tune-ups. The MARR adopted by TT Racing is 6.5 %. The two guesses for the RORs are: 6% and 7% | Machine R -145000 - 16000 Machine S -80,000 -28000 Initial cost, $ Annual operating and maintenance cost, $ per year Annual revenue, $ per year Salvage value, $ 51000 35,000 10 61,000 20,000 5 Life, years a) Generate Incremental Cash Flow Estimates Table b) Construct the Incremental Cash Flow Diagram c) Determine the Incremental Annual Worth cash flow equation. d) Using incremental annual worth cash flow equation for the incremental rate of return analysis, select which machine (R or S) will be the best option based on Incremental Rate of Return (AIRR) e) Solve the PW for each option and determine which option is the best
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