Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Use incremental analysis to evaluate the 2
alternatives. Assume a seven year life and a
MARR of 15%. (IRRS for each is given)
Would picking the highest IRR give you the
best investment decision?
Alt A
Alt B
Initial
$21,000 $16,000
$3,000
$7,500
Investment
O&M Costs
$2000
Annual Benefit
$8,000
Salvage Value
$5,000
$8,000
IRR
23.2%
24.8%
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Transcribed Image Text:Use incremental analysis to evaluate the 2 alternatives. Assume a seven year life and a MARR of 15%. (IRRS for each is given) Would picking the highest IRR give you the best investment decision? Alt A Alt B Initial $21,000 $16,000 $3,000 $7,500 Investment O&M Costs $2000 Annual Benefit $8,000 Salvage Value $5,000 $8,000 IRR 23.2% 24.8%
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