Capital budgeting

Mehul Bhanawat (Senior Associate) (46 Points)

12 October 2014  

The cash flows of three mutually exclusive alternative as shown in table. the study period is five year and imputed market value should be used to adjust cash flow. the MARR 12% 

    Alternative A Alternative B Alternative C
         
Cash out flow(Investment)   98600 115000 81200
         
Annual Income    19500 26000 17500
         
 Salvage value   4000 27000 6000
         
useful life   9 year 5 year  7 Year

 

Using External Rate of return method determine best alternative