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Anonymous
timer Asked: Nov 7th, 2016

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In the Rawhide Company (a leather products manufacturer), decisions regarding approval of proposals for capital investment are based upon a stipulated MARR of 18% per year. The five packaging devices listed in the table below were compared assuming a 10 year useful life and zero market value for each at that time. Which one (if any) should be selected? Use the IRR and PW method.

Packaging Equipment

A

B

C

D

E

Capital Investment

$38,000

$50,000

$55,000

$60,000

$70,000

Annual revenue less expenses

$11,000

$14,100

$16,300

$16,800

$19,200

Rate of return (IRR)

26.1%

25.3%

26.9%

25.0%

24.3%

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