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2017//3(b)//Engineering Eco//KU

Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows:

i. Which environmental protection equipment alternative should be selected? The firm’s MARR is 20% per year.
ii. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be $15,000. Which alternative would you recommend?




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