A firm is considering two mutually exclusive alternatives as part of an upgrade to its...
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Accounting
A firm is considering two mutually exclusive alternatives as part of an upgrade to its supply chain management system. The cash flow information is presented in the table below. Based on a 20-year study period and 12% MARR, use the incremental ERR method to determine which alternative is the most economical. Installation cost Net annual revenue12500 Salvage value Useful life Calculated IRR 100000 15000 0 20 years 13.9% 80000 20 years 14.6% 1) Which alternative should be used as the base scenario for the calculation? 2) What is the incremental ERR of the delta cash flow? (Please keep one decimal place and only enter the numbers. e.g. if your answer is 15.37%, please enter 15.4) 3) Which alternative should be selected
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