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In: Economics

Consider the following two mutually exclusive cost alternatives: Alternative A Alternative B Capital Investment $8,000 $16,000...

Consider the following two mutually exclusive cost alternatives:

Alternative A

Alternative B

Capital Investment

$8,000

$16,000

Annual Expenses

$3,500

$3,400

Useful life

8 years

12 years

Market value at the end of useful life

0

$3,000

Given MARR is 10% per year, answer the following:

  1. Assuming Repeatability applies, determine which alternatives should be selected.

b. For a study period of 12 years, and assuming repeatability does not hold for the Alternative A consider there will be an annual contracting cost of $ 7,000 in the end of 9th, 10th, 11th and 12th year and still no market value for A, determine which alternative should be selected

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Expert Solution

Rahul Sunny answered 1 year ago
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