Homework Answers
Salvage value is not relevant when useful life is infinite
Project A:
Equating PV = discounted value of annual revenues at IRR
10000000 = 950000/IRR
IRR = 9.5%
Project B:
8500000 = 900000/IRR
IRR = 10.59%
Project C:
7600000 = 800000/IRR
IRR = 10.53%
Project B should be selected owing to highest IRR > MARR.
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