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There are three mutually exclusive alternatives that are candidates for implementation by the Yellow Freight Company’s sorting operations center, and doing nothing is not an option. All alternatives have a life of 10 years, and they have negligible market (salvage) value after 10 years. The firm’s MARR is 10% per year.

Alt A

Capital investment: $740,000

Annual expenses: $361,940

Alt B

Capital investment: $1,840,000

Annual expenses: $183,810

Alt C

Capital investment: $540,000

Annual expenses: $420,000

 

How much is the IRR of the last increment?

Financial Management, Finance

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