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Question: A firm is considering an investment in a numerical controlled milling machine needed for a ten (10) year project life. Three alternatives are under consideration. The firm uses an 18% MARR. The cash flows of the alternatives are as follows: Cash Flow A B C Initial cost $21,500 $19,200 $23,250 O & M costs / year $ 2,650 $ 2,650 $ 1,300 Annual cost savings $ 9,000 $ 9,000 $ 8,000 Salvage value $ 6,225 $ 6,125 $ 7,900 Technical life - years 10 5 10 Using incremental rate of return analysis, determine which alternative the firm should select.

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Category:- Basic Finance
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