Question
Ace Welding Services, Inc. has expanded their machine acquisition to five alternative machines/processes. Ace has adopted a planning horizon of four years and all options can last this long. Their MARR is now 10%. The data is shown below. Recommend a single choice for management that uses the internal rate of return criterion. Submit your solution in a spreadsheet. Alternatives Investment in year 0 Annual Cash Flow Salvage value in year 4 1 $50 000 $18 000 $0 2 $250 000 $85 000 $75 000 3 $350 000 $105 000 $125 000 4 $600 000 $150 000 $400 000 5 $800 000 $165 000 $600 000
Explanation / Answer