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Two alternatives, A and B, are under consideration. Both have a life of five years. Alternative A needs an initial investment of $35,000 and provides
Two alternatives, A and B, are under consideration. Both have a life of five years. Alternative A needs an initial investment of $35,000 and provides a net revenue of $10,000 per year for five years. Alternative B requires an investment of $38,000 and has an annual net revenue of $12,000. All estimates are in actual dollars. Inflation is expected to be 2.5% per year for the next five years, and the inflation-free (real) MARR is 12.2% per year. Which alternative should be chosen?
a. | Neither alternative | |
b. | Alternative A | |
c. | Alternative B |
CHOOSE ONE
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