A president in a company wants to purchase a new stand to use at festival each year. The stand options are A. Ice Cream Stand, B. Lemonade Stand, C. Hotdog Stand, and D. Cotton Candy Stand. He wants to know which stand is the best investment. Consider the following four mutually exclusive alternatives. Each alternative has a 20 year life and no salvage value. MARR = 9%
a) Draw the Cash flow diagrams for each alternative.
b) Find the ROR of each alternative.
c) Calculate which alternative is the best investment.
A B C D
Initial Cost: $5000 $3000 $7000 $9000
Uniform Annual Benefit: $730 $460 $890 $910