Question
Question 1 (10 marks): Company has 4 revenue options. Option A: initial cost of $300,000, annual savings of $65,000, salvage of $150,000, useful life of
Question 1 (10 marks): Company has 4 revenue options. Option A: initial cost of $300,000, annual savings of $65,000, salvage of $150,000, useful life of 6 years Option B: initial cost of $495,000, annual savings of $80,000, an additional one-time saving of $150,000 in year 3, salvage of $250,000, useful life of 4 years Option C: initial cost of $350,000, annual savings of $100,000, salvage of $200,000, useful life of 3 years Option D: initial cost of $400,000, annual savings of $100,000, salvage of $300,000, useful life of 2 years a) If the options are independent and MARR is 15%, which should be selected? Justify answer using ROR. b) If the options are mutually exclusive and MARR is 15%, which should be selected? Just answer using ROR. c) If MARR is 20%, which should be selected if they are independent options? d) If MARR is 20%, which should be selected if they are mutually exclusive?
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