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Q5) Three alternatives have the following cost and annual benefit data associated with them: 10 10 Data Alt 1 Alt. 2 Alt.3 Useful Life, Years

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Q5) Three alternatives have the following cost and annual benefit data associated with them: 10 10 Data Alt 1 Alt. 2 Alt.3 Useful Life, Years First Cost $1,325,000 $1,980,000 $1,650,000 Annual Benefit (265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 191,000 AnnualM&O Gradient 2,300 2,100 1,980 145,000 205,000 178,000 Loan Payment 150,946 225,565 187,971 The loan payments are calculated using an interest rate of 10%, a life equal to the life of the machine, and a down payment of 30%. Use a MARR of 12% and determine which machine, if any, should be purchased. Use incremental rate of return for your analysis. Do not forget to use DN in the analysis

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