Expert Solutions

Evaluation Criteria using IRR

Ace Welding Services, Inc. has expanded their machine acquisition to five alternative machines/processes. Ace has adopted a planning horizon of four years and all options can last this long. Their MARR is now 10%. The data is shown below. Recommend a single choice for management that uses the internal rate of return criterion. Submit your solution in a spreadsheet.

Alternatives
Investment in year 0 Annual Cash Flow  Salvage value in year 4

1 $50,000 $18,000$0
2 $250,000 $85,000 $75,000
3 $350,000 $105,000 $125,000
4 $600,000 $150,000 $400,000
5 $800,000 $165,000 $600,000