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The cash flows for three alternatives are as follows: Year A B C 0 -$500 -$600 -$900 1 -400 -300 0 2 200 350 200
The cash flows for three alternatives are as follows:
Year | A | B | C |
0 | -$500 | -$600 | -$900 |
1 | -400 | -300 | 0 |
2 | 200 | 350 | 200 |
3 | 250 | 300 | 200 |
4 | 300 | 250 | 200 |
5 | 350 | 200 | 200 |
6 | 400 | 100 | 200 |
a.) Based on payback period, which alternative should be selected?
b.) Using future worth analysis, and a 8% interest rate, determine which alternative should be selected.
c.) If the answers to a) and b) are not the same, explain why. If they are the same, then omit this part.
Clearly show all steps with formulas used to get to the correct answer. Microsoft Excel is optional.
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