Question: Three mutually exclusive electric-vehicle battery systems are being investigated by a large automobile manufacturer. Pertinent data are given below:
Battery System A B C
Initial investment (millions) $2,000 $8,000 $20,000
Annual receipts less expenses (millions) 600 2,200 3,600
System life (years) 5 5 10
a. Use the PW method to select the best battery system. The MARR is 15% per year, and the system chosen must provide service for 10 years. Assume repeatability.
b. Confirm your recommendation in Part A using the IRR method.