Rr4 8-21A firm is considering the following alternatives, as well as a fifth choice:do nothing. Each alternative has a 5-year useful life.12Rate of return 10%3Initial cost $100,000 $130,000 $200,000 $330,000Uniform annual 26,380 38,780 47,480 91,55015%46%12%(a) Construct a choice table for interest rates from 0% to 100%.(b) The firm's minimum attractive rate of return is 8%. Which alternativeshould be selected?

Incremental Analysis: Choice tables are used by investors to compute the interest rates over which…

Answered: al cost $100,000 $130,000 $200,000…

Business

Economics

al cost $100,000 $130,000 $200,000 $330,000 3 orm annual 26,380 38,780 47,480 91,550 of return 10% 15% 6% 12%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Rr4

8-
21
A firm is considering the following alternatives, as well as a fifth choice:
do nothing. Each alternative has a 5-year useful life.
1
2
Rate of return 10%
3
Initial cost $100,000 $130,000 $200,000 $330,000
Uniform annual 26,380 38,780 47,480 91,550
15%
4
6%
12%
(a) Construct a choice table for interest rates from 0% to 100%.
(b) The firm's minimum attractive rate of return is 8%. Which alternative
should be selected?

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