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: You are considering 3 types of irrigation systems that will be used in your vegetable farm for optimal results. The study period is 20
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You are considering 3 types of irrigation systems that will be used in your vegetable farm for optimal results. The study period is 20 years and the cash flows involved are shown in the table below. Initial cost (RM) Annual yield (RM) Maintenance (RM) Sprinkler 80,000 30,000 2.000 (annual) 5,000 (every 5 years) 20,000 Drip 100,000 40,000 1,500 (every 4 years) Trench 60.000 20.000 1,000 (annual) 2.000 (every 10 years) Salvage value (RM) 10,000 Determine which irrigation system is the most profitable using the incremental IRR method, if the minimum attractive rate of return is 20%Step by Step Solution
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