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Your company needs to buy a new delivery vehicle, and you're considering three different options: X, Y, and Z. Each has a different capacity and
Your company needs to buy a new delivery vehicle, and you're considering three different options: X, Y, and Z. Each has a different capacity and therefore a different annual profit. Your MARR is 15% and doing nothing is not an option. Initial Cost Annual Profit Salvage Value Useful Life R Vehicle X $50,000 $12,000 $5,000 12 Vehicle Y $65,000 $13,500 $4,000 12 Vehicle Z $70,000 $16,000 $7,000 12 Using incremental analysis and the IRR, answer the following questions: a) Which vehicle would you choose as the base alternative? b) Analyze the difference between the base alternative and the second-choice alternative. c) Analyze the difference between the current base alternative and the third-choice alternative. a) Which vehicle would you choose as the base alternative? O A. Vehicle X OB. Vehicle Y OC. Vehicle z b) Analyze the difference between the base alternative and the second-choice alternative. IRR AU- ) = % (Round to 1 decimal place) c) Analyze the difference between the current base alternative and the third-choice alternative. IRR AI-1)= % (Round to 1 decimal place) d) Which vehicle should you choose? O A. Vehicle x O B. Vehicle Y OC. Vehicle z
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