A company is evaluating four appliances to choose the best from an economic point of view. The useful life of the four options is 10 years and the company uses a MARR=15%. The appliance (A-D) details are as follows: (top row is Initial Cost and bottom row is uniform annual benefit)

A company is evaluating four appliances to choose the best from an economic point of view. The useful life of the four options is 10 years and the company uses a MARR=15%. The appliance (A-D) details are as follows: (top row is Initial Cost and bottom row is uniform annual benefit)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

A company is evaluating four appliances to choose
the best from an economic point of view. The useful
life of the four options is 10 years and the company
uses a MARR=15%. The appliance (A-D) details are as
follows: (top row is Initial Cost and bottom row is
uniform annual benefit)
A
В
C
$7,500
$5,500 $5,000 $8,500
1,600
1,200
1,000
1,700
What is the IRR value for each appliance?

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