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Three mutually exclusive alternatives are being considered. A B C Initial Investment $50,000...

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Finance

Three mutually exclusive alternatives are being considered.

A B C

Initial Investment $50,000 $22,000 $15,000

Annual net income 5093 2077 1643

Computed rate of return 8% 7% 9%

Each alternative has a 20-yr useful life with no salvage value.

In constructing a choice table for interest rates from 0% to infinity,

Choice table
From To Go with
0% ? ?
? ? ?
? infinity ?

Question:

A) In the first row: To ________% ?

9%

7.6%

8%

2.1%

B) In the second row: To ________% ?

9%

7.6%

8%

2.1%

C) In the first row: Go with alternative ________?

A

B

C

do nothing

D) In the second row: Go with alternative ________?

A

B

C

do nothing

E) In the third row: Go with alternative ________?

A

B

C

do nothing

F) If the minimum attractive rate of return is 7%, Go with alternative ________?

A

B

C

do nothing

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