Question
Three mutually exclusive alternatives are being considered for the production equipment at a certain medium industry producing hollow blocks and culverts. The estimated cash flows
Three mutually exclusive alternatives are being considered for the production equipment at a certain medium industry producing hollow blocks and culverts. The estimated cash flows for each alternative are shown below and the MARR of the firm is 20%. Model A Model B Capital Investment (P) 100,000 210,000 Annual revenues (P) 160,000 300,000 Model C 350,0000 400,000 Annual Expenses (P) 105,000 200,000 255,000 Market value at end of useful life (P) 5,000 21,000 30,000 Useful life (years) 6 12 12 a) Which equipment alternative (if any) should be selected? Using repeatability method b) Which should be selected using co terminated assumptions
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