Sam is buying a refrigerator. He has two choices. A used one, at $475, should...
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Sam is buying a refrigerator. He has two choices. A used one, at $475, should last him about three years. A new one, at $1275, would likely last eight years. Both have a scrap value of zero. Use an IRR analysis to determine which of the two alternatives is best. The MARR is 8 percent. Use the repeated lives method to deal with the unequal service lives of the two alternatives. Considering the alternatives in the order of lowest first cost, the best option is to buy the used refrigerator, which has an incremental rate of return of 9.34% (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)
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