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Lean Produ × N Netflix >. D Auto Leaf × M Inbox (655 × G ford 9000. ×/OQuz: EEH × cle secure! https://oregonstate.instructure.com/courses/1648905/quizzes/2397507/take old grinde X how to scr X Ch 99 Stu x D Question 1 0.65 pts Oregon State University Food Processors International is trying to find a new turkey processing system. They have had two options presented to them, but are having a difficult time making a decision. Both turkey processing systems have a lifespan of 10 years. The company uses a MARR of 8% to make financial decisions. The Bird3500X system has a first cost of $135,000, annual expenses of $60,000, annual savings of $80,000, and a salvage value of $5,000 at the end of the 10 years. The Plucky Time system has a first cost of $200,000, annual expenses of $80,000, annual savings of $110,000, and a salvage value of zero at the end of the 10 years What is the incremental ROR for the two alternatives? Courses 28 Groups Enter your answer without a % sign and use 2 decimal places. For example, if you calculate 5.75%, enter it as 5.75 If using Excel, be sure to format your answer for 2 decimal places. Calenda Inbox

Explanation / Answer

Computation of IRR of both alternative -

Incremental IRR = 7.92.

In case of any clarification required pelase comment.

Bird 3500 Year 0 1 2 3 4 5 6 7 8 9 10 Initial expense 135000 annual expense 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 savings 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 Depriciation 13500 13500 13500 13500 13500 13500 13500 13500 13500 13500 Salvage value 5000 EBIT 6500 6500 6500 6500 6500 6500 6500 6500 6500 11500 less Tax @0% 0 0 0 0 0 0 0 0 0 0 EAT 6500 6500 6500 6500 6500 6500 6500 6500 6500 11500 add Depriciation 13500 13500 13500 13500 13500 13500 13500 13500 13500 13500 Cash Flow -135000 20000 20000 20000 20000 20000 20000 20000 20000 20000 25000 8.24% Plucky time system Year 0 1 2 3 4 5 6 7 8 9 10 Initial expense 200000 annual expense 80000 80000 80000 80000 80000 80000 80000 80000 80000 80000 savings 110000 110000 110000 110000 110000 110000 110000 110000 110000 110000 Depriciation 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 EBIT 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 less Tax @0% 0 0 0 0 0 0 0 0 0 0 EAT 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 add Depriciation 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 Cash Flow -200000 30000 30000 30000 30000 30000 30000 30000 30000 30000 30000 8.14% Incremental Cash flow (First - second alternative) -65000 10000 10000 10000 10000 10000 10000 10000 10000 10000 5000 8%

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