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lI Installed cost Net annual revenue Salvage value Useful life Calculated IRR $40,000 $25,000
$20,000 $6,300$5,650$5,300 20 years 14.7% 20 years 22.2% 10 years 23.2%
Solution
Answer:
The most economical alternative is :
B. alternative I
Because the imputed market value of alternative I is greater than its MARR
Formula to calculate Imputed Market Value is :
A = I*(A/P,i,N)

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