Problem
Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petrolium refinery. one of these alternatives must be selected. the estimated cash flows for each alternative are as follows: (6.5)
ALTERNATIVE A:
capital investment= $20,000
annual expenses= $5,500
market value at end of useful life= $1,000
useful life= 5 years
ALTERNATIVE B:
capital investment= $38,000
annual expenses= $4,000
market value at end of useful life= $4,200
useful life= 10 years
a. Which environmental protection equipment alternative should be selected? the firms MARR is 20% per year. assume the equipment will be needed indefinitly
b. Assume the study period is shortened to five years. the market value of alternative B after five years is estimated to be $15,000. which alternative would you recomend
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.