A firm is considering three mutually exclusive alternatives as part of a production improvement...

Question

A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows:
ABC
Installed cost$10,000$15,000$20,000
Uniform annual benefit1, XXXXXXXXXX
Useful life, in years102020
For each alternative, the salvage value at the end of-useful-life is zero. At the end of 10 years Alt, A could be replaced by another A with identical cost and benefits. The MARR is 6%. If the analysis period is 20 years, which alternative should be selected?

Komalavalli · Accepted Answer

A
	B
	C
	Cost
	10000
	15000
	20000
	Benefit 
	6251
	6251
	890
	Useful life 
	20
	20
	20
	MARR
	6%
	6%
	6%
	 
	 
	 
	 
	 
	 
	 
	 
	Present value of cash outflow 
	-$1,14,699 
	-$1,72,049 
	-$2,29,398 
	Present value of cash inflow 
	-$71,698 
	-$71,698 
	-$10,

A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows: ABC Installed cost$10,000$15,000$20,000 Uniform annual...

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