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Consider the following two investment alternatives, in which Alternative II is more economically attractive than Alternative I:

                                                        Alternative I                Alternative II

            Initial Investment                    $10,000                       $40,000

            Useful life                               5 years                         10 years

            Terminal market value   $1,000                         $5,000

            Annual expenses                    $17,500                         $7,000

            EUAC (12%), approx.          $20,117                         $13,800

Determine the percent change in the annual expenses for Alternative I that would make the two investments equally attractive. (Enter your answer as a positive or negative number without the percent % sign.)

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92411858

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