Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are given below. The study period is 30 years and the firm's MARR is 21% per year. Assume repeatability and reinvestment of positive cash balances at 21% per year. a. What is the simple payback period for Alternative 1? b. What is the annual worth of Alternative 2? c. What is the IRR of the incremental cash flows of Alternative 2 compared to Alternative 1? d. Which alternative should be selected? Alt. 1 Alt. 2 Alt. 3 - $25,000 - $19,000 $27,000 10,000 5 years - $60,000 - $33,000 $57,500 10,000 5 years - $40,000 Capital Investment - $25,000 $37,000 10,000 6 years Annual Costs Annual Revenues Market Value at End of Useful Life Useful Life IRR 24.6% 32.0% 23.0% Discrete Compounding; i= 21% Uniform Series Uniform Gradient Single Payment Gradient Compound Compound Gradient Present Sinking Capital Recovery Uniform Amount Worth Amount Present Fund Present Series Factor Factor Factor Worth Factor Factor Factor Worth Factor Factor To Find A To Find P To Find A Given F To Find P To Find A To Find F To Find P To Find F Given F Given A Given A Given P Given G Given G Given P N F/P P/F P/A A/F A/P P/G A/G F/A 1 1.2100 0.8264 1.0000 0.8264 1.0000 1.2100 0.0000 0.0000 1.464 0.6830 2.2100 1.5095 0.4525 0.6625 0.6830 0.4525 2 3 1.7716 0.5645 3.6741 2.0739 0.2722 0.4822 1.8120 0.8737 5.4457 2.1436 0.4665 2.5404 0.1836 0.3936 3.2115 1.2641 2.5937 0.3855 7.5892 0.1318 0.3418 4.7537 6246 2.9260 6 3.1384 0.3186 10.1830 3.2446 0.0982 0.3082 6.3468 1.9561 3.7975 13.3214 0.0751 2.2597 7 0.2633 3.5079 0.2851 7.9268 4.5950 0.2176 17.1189 3.7256 0.0584 0.2684 9.4502 2.5366 0.046 5.5599 0.1799 21.7139 3.9054 0.2561 10.8891 7882 10 6.7275 0.1486 27.2738 4.0541 0.0367 0.2467 12.2269 .0159