Transcribed Image Text
Three mutually exclusive investment alternatives are beingconsidered. The estimated cash flows for each alternative are givenbelow. The study period is 30 years and the? firm's MARR is 17% peryear. Assume repeatability and reinvestment of positive cashbalances at 17?% per year.a. What is the simple payback period forAlternative? 1?b. What is the annual worth of Alternative?2?c. What is the IRR of the incremental cashflows of Alternative 2 compared to Alternative? 1?d. Which alternative should be selected?? Alt.1 Alt. 2 Alt. 3CapitalInvestment -25,000 -60,000 -45,000Annual Costs -12,000-30,000 -20,000AnnualRevenues 28,00057,500 38,000Market Value at End of UsefulLife 9,000 9,000 9,000Useful Life,years 5 5 6IRR 59.9% 37.7% 34.4%