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You have three investment options*: Option 1 Option 2 Option 3 Initial Cost 400 1300 825 Uniform Annual Benefit 120 200 190 Useful Life in
You have three investment options*:
Option 1 | Option 2 | Option 3 | |
Initial Cost | 400 | 1300 | 825 |
Uniform Annual Benefit | 120 | 200 | 190 |
Useful Life in Years | 6 | 12 | 8 |
*you also have the option of not picking any of them.
a) Calculate the IRR for each.
b) Make a graph depicting the EUAW (Equivalent Uniform Annual Worth) for each option over the [0%,100%] domain.
c) Make a choice table to cover the range from 0% to 100% annual interest rate.
d) If the discount rate (MARR) your company is using is 8%, how confident would you be about your decision on choosing a certain option? How about for a discount rate of 12.5%?
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