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Two alternative designs are under consideration for a new ride called the Scream Machine. The two candidate designs differ in complexity, cost, and predicted revenue.
Two alternative designs are under consideration for a new ride called the Scream Machine. The two candidate designs differ in complexity, cost, and predicted revenue. The first alternative design (A) will require an investment of $200,000 and is estimated to produce revenue of $60,000 annually over a 10-year planning horizon. The second alternative design (B) will require an investment of $500,000 and is expected to generate annual revenue of $85,000. A negligible salvage value is assumed for both designs. "Do nothing alternative" is not feasible. Perform present worth analysis to show which alternative is preferred using incremental approach and 10% MARR.
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