A company that manufactures magnetic membrane switches is investigating three production options tha
A company that manufactures magnetic membrane switches is investigating three production options that have the estimated cash flows below in millions of dollars if the interest rate of 15% per year, what is the annual worth of the In-house option in millions of dollars?
In-house
License
Contract
First cost, $
-30
-3
0
Annual operating cost, $ per year
-5
-0.2
-2
Annual income, $ per year
14
1.5
2.5
Salvage value, $
7
–
–
Life, years
10
∞
5
