Question : Company has 4 revenue options.
Option A : initial cost of $300,000, annual savings of $65,000, salvage of $150,000, useful life of 6 years
Option B : initial cost of $495,000, annual savings of $80,000, an additional one-time saving of $150,000 in year 3, salvage of $250,000, useful life of 4 years
Option C : initial cost of $350,000, annual savings of $100,000, salvage of $200,000, useful life of 3 years
Option D : initial cost of $400,000, annual savings of $100,000, salvage of $300,000, useful life of 2 years
a) If the options are independent and MARR is 15%, which should be selected? Justify answer using ROR.
b) If the options are mutually exclusive and MARR is 15%, which should be selected? Just answer using ROR.
c) If MARR is 20%, which should be selected if they are independent options?
d) If MARR is 20%, which should be selected if they are mutually exclusive?