Question

Jupiter Inc. has decided to acquire a new weather satellite. After considering several options it has narrowed its search to two satellites.

Satellite XPTO: purchase cost of $331222 and operating costs of $26454 per year (paid at the end of each year).

Satellite XYZ: purchase cost of $140617 and operating costs of $64436 per year (paid at the end of each year).

Both satellites have a service life of 9 years. Based on the defender-challenger approach and given that the MARR is 4%, reinvestment rate is 12%, and minimum external rate of return is 10%, compute the incremental external rate of return of choosing the most expensive satellite. Note: round your answer to two decimal places, and do not include spaces, percentage signs, plus or minus signs, nor commas. If your answer is 15%, write 15, not 0.15.

I need to see the math behind all of your steps so I can create an exel table to do the calculation for me. So SHOW ALL MATH

Answer 1