The following mutually exclusive investment alternatives have been presented to
ID: 1091113 • Letter: T
Question
The following mutually exclusive investment alternatives have been presented to you.
A
B
C
D
E
Capital investment
Annual expenses
Annual revenues
MV at EOY 10
IRR
$60,000
$30,000
$50,000
$15,000
31.5 %
$90,000
$40,000
$52,000
$15,000
7.4 %
$40,000
$25,000
$38,000
$10,000
30.8 %
$30,000
$15,000
$28,000
$10,000
42.5 %
$70,000
$35,000
$45,000
$15,000
9.2 %
The life span of all alternatives is 10 years. Using a MARR of 15 % per year, what is the preferred alternative?
A
B
C
D
E
Capital investment
Annual expenses
Annual revenues
MV at EOY 10
IRR
$60,000
$30,000
$50,000
$15,000
31.5 %
$90,000
$40,000
$52,000
$15,000
7.4 %
$40,000
$25,000
$38,000
$10,000
30.8 %
$30,000
$15,000
$28,000
$10,000
42.5 %
$70,000
$35,000
$45,000
$15,000
9.2 %
Explanation / Answer
Option D)
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