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The GeoStar Company, a leading manufacturer of wireless communication devices, is considering three cost-reduction proposals in its batch job-shop manufacturing operations. The company has already
The GeoStar Company, a leading manufacturer of wireless communication devices, is considering three cost-reduction proposals in its batch job-shop manufacturing operations. The company has already calculated rates of return for the three projects, along with some incremental rates of return where Ao denotes the do-nothing alternative. (20 pts.) Incremental Investment Incremental Rate of Return (%) 18% A - A. A2 A. Az - Ao A2 - A Az A Az - A2 20 25 10 18 23 If the MARR is 15%, a) Which project(s) can be acceptable individually? Why? (Hint: Compare the projects against do nothing Ac)(10 pts.) b) Among A1, A2 and A3, which project should be selected? Explain why? (10 pts.)
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