Given two alternatives, A and B; you have performed the cost analysis belov Your company has an MARR of 10%, which option should you choose? A B A-B Initial Cost $125,000 $105,000 $20,000 Annual $30,500 $27,000 $3,500 Benefits Annual $2.900 $4.000 ($1.100)

Given two alternatives, A and B; you have performed the cost analysis belov Your company has an MARR of 10%, which option should you choose? A B A-B Initial Cost $125,000 $105,000 $20,000 Annual $30,500 $27,000 $3,500 Benefits Annual $2.900 $4.000 ($1.100)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Given two alternatives, A and B; you have performed the cost analysis below.
Your company has an MARR of 10%, which option should you choose?
A
B
А-B
Initial Cost $125,000 $105,000 $20,000
Annual
$30,500
$27,000 $3,500
Benefits
Annual
$2,900
$4,000 ($1,100)
Costs
Salvage
$0
$7,000 ($7,000)
Value
Life
7
7
7
IRR
12.2%
12.9%
7.8%
A
Neither
Either could be chosen, they are equally as good

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