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Suppose that you are evaluating two different alternatives.

The inflated cost stream for:

Alternative A Alternative B

Year 1 = $ 8,000 $10,000

Year 2 = $ 9,000 $12,000

Year 3 = $12,000 $10,000

Year 4 = $12,000 $ 9,000

Year 5 = $13,000 $ 9,000

Assume that the cost of capital is 12%.

1) Which alternative should be selected?

2) At what point in time with the selected alternative assume a poitn of preference over the other (i.e. break-even point)

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M92410393
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