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Two machines have data as shown below. Using an incremental internal rate of return, which machine should be selected: Machine C Machine D Initial cost
Two machines have data as shown below. Using an incremental internal rate of return, which machine should be selected:
Machine C | Machine D | |
Initial cost | $550,000 | $987,000 |
Life in years | 2 | 3 |
Salvage after life | 22% | 32% |
Benefits per year | $384,000 | $434,000 |
Costs per year | $162,900 | $196,800 |
MARR | 8% | |
Inflation (increase in all costs) | 5% | |
Increase in benefits | 9% |
Group of answer choices
Machine C
Machine D
Either machine will be fine.
Reject both machines.
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