Qusetion: Two hazardous environment facilities are being evaluated, with the projected life of each facility being 10 years. The cash flows are as follows:
|
|
Alt. A
|
Alt. B
|
|
First cost
|
$615,000
|
$300,000
|
|
Maintenance and operating cost
|
10,000
|
25,000
|
|
Annual benefits
|
158,000
|
92,000
|
|
Salvage value
|
65,000
|
-5,000
|
The company uses a MARR of 15%. Using rate of return analysis, which alternative should be selected?