Question

Orpheum Productions in Nevada is considering three mutually exclusive alternatives for lighting enhancements to one of its recording studios. Each enhancement will increase revenues by attracting directors who prefer this lighting style. The cash flow details for these enhancements are shown in the table below. The MARR is 10% per year. Based on an internal rate of return analysis, and assuming a do-nothing alternative, which alternative (if any) should be implemented? Please, no excel sheets.

End of Year	Light Bar	Sliding Spots	Reflected Beam
0	-$6,000	-$14,000	-$20,000
1	$2000	$3.500	$0
2	$2000	$3.500	$2,300
3	$2000	$3.500	$4,600
4	$2000	$3.500	$6,900
5	$2000	$3.500	$9,200
6	$2000	$3.500	$11,500

Answer 1