Sam is buying a refrigerator. He has two choices. A used one, at $475, should last him about three years. A new one, at $1225, would likely last eight years. Both have a scrap value of zero. Use an IRR analysis to determine which of the two alternatives is best. The MARR is 8 percent. Use the repeated lives method to deal with the unequal service lives of the two alternatives. Considering the alternatives in the order of lowest first cost, the best option is ▼which has an incremental rate of return of %. (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)

Sam is buying a refrigerator. He has two choices. A used one, at $475, should last him about three years. A new one, at $1225, would likely last eight years. Both have a scrap value of zero. Use an IRR analysis to determine which of the two alternatives is best. The MARR is 8 percent. Use the repeated lives method to deal with the unequal service lives of the two alternatives. Considering the alternatives in the order of lowest first cost, the best option is ▼which has an incremental rate of return of %. (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)

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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