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You are looking into an investment that has the following cash flows: initial cost equal...

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Accounting

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You are looking into an investment that has the following cash flows: initial cost equal to $26,700, yearly income of $4,968, yearly cost of $900 and a proposed salvage value of $1,000. The life of the investment is 16 years. These cash flows do not provide an adequate return on the investment. If the investor uses a MARR of 14% to evaluate his investments, what would the minimum salvage value need to be for this investment to provide a sufficient return? $24,148 $9,876 $23,190 $14,298 $6,563 B D E Initial Investment 3,300 -6,500 -5,000 -8,000 -4,000 700 1,200 900 850 Annual Benefit Salvage Value Useful life 1,400 1,000 100 400 300 200 10 10 10 10 10 IRR 16.85% 13.49% 12.86% 12.67% 17.01% EA CA B-A D-A D-B Delta IRR 17.74% 4.63% 9.92% 9.76% 9.47% C-E B-E D-E B-C D-C Delta IRR -7.43% 7.50% 8.31% 15.52% 12.38% Which alternate should be selected if MARR is 9% (mutually exclusive)? Which alternate should be selected if MARR is 9% (mutually exclusive)? E B A D

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