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Ace Welding Services, Inc. has expanded their machine acquisition to five altern

ID: 1185253 • Letter: A

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 <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

Explanation / Answer


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