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Suppose that we are analyzing the following six mutually exc…

Posted byAnonymous April 23, 2025April 23, 2025

Questions

Suppоse thаt we аre аnalyzing the fоllоwing six mutually exclusive alternatives using the rate-of-return method. The useful life of each alternative is 10 years, and the MARR is 10% per year.  All salvage values are assumed to be zero.               Alternative         First Cost      Net Yearly Benefits         Rate of Return                     A                     $  900                  $  150                             10.6%                     B                      1,500                      276                             13.0%                     C                      2,500                      400                               9.6%                     D                      4,000                      925                             19.1%                     E                       5,000                   1,125                            18.3%                     F                       7,000                   1,425                             15.6% It is also possible to "do nothing."  Use rate of return analysis to select the best alternative.  Be sure to show all your comparisons, in the proper sequence, as outlined by the procedure illustrated in class. (NOTE:  You do NOT have to solve for exact ROR’s; try to approximate to the nearest 1 or 2%).  Which alternative should be selected? Justify your selection with your scratch work. Most points will be awarded for your justification via scratch work, NOT a correct multiple choice selection.

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