When evaluating a single alternative using annual cash flow analysis, the alternative is recommended for investment if (EAB - EAC) is positive or zero at the MARR. Otherwise, reject the investment.
An asset has an initial cost of $100,000 and an estimated salvage value of $40,000 alter its 6-ycar service life. Estimated O&M costs are $50,000 in year one, increasing by S6,000 per year thereafter. The asset is expected to generate an annual benefit of $110,000. Is this a desirable investment if the MARR is 20%?