Modern Medical Mechanics (M3) chooses one major upgrade to implement in their pr

Question

Modern Medical Mechanics (M3) chooses one major upgrade to implement in their production facility each year. The choice is made based only on the internal rate of return criterion. The required investment and annual forecasted cash flows for five alternatives are shown below. If M3 uses a planning horizon of 4 years for investment approvals and a MARR of 12%, which alternative should be selected?

Investment in Year 0 Annual Savings A Pharmaceutical robots ($675,000) $260,000 B X-ray quality inspection ($950,000) $350,000 C Security System Upgrades ($570,000) $225,000 D Warehouse automation ($700,000) $275,000 E CNC lathe ($350,000) $100,000

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Modern Medical Mechanics (M3) chooses one major upgrade to implement in their pr

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