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There are five alternative machines to do a given job. Each is expected to have a market value of 100% of the investment amount at
There are five alternative machines to do a given job. Each is expected to have a market value of 100% of the investment amount at the end of its life of 4 years. The firm's minimum attractive rate of return is 12%. Analyze the sensitivity of the best choice die to the salvage value ranging from 0% to 100% of the initial investment.
Machines | |||||
---|---|---|---|---|---|
A | B | C | D | E | |
Investment | $ 10,000 | $ 14,000 | $ 21,000 | $ 27,000 | $ 34,000 |
Net Cash Flow per Year | 1,100 | 1,800 | 2,800 | 3,400 | 4,450 |
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