Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11.000

Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11.000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Question

Problem 1
Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of
these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative
are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected
alternative?
Please round your answer to the nearest integer.
Equipment A:
• Investment Cost: $77,000
• Annual Revenue: $21,000
• Market Value: $11,000
Useful Life: 9 Years
Equipment B:
Investment Cost: $28,000
• Annual Revenue: $20,000
• Market Value: $8,000
• Useful Life: 6 Years

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