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What are comparable eacs for the two alternatives

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Reference no: EM132165330

Question: For the data in Problem, find the incremental IRR for buying the more expensive tire.

Problem: If you drive 10,000 miles per year, which tire should you buy? Tire A costs $65 and should last 40,000 miles. Tire B costs $85 and should last 60,000 miles. You have an outstanding balance on your credit card, and you are paying 20% as an effective annual rate.

(a) What are comparable EACs for the two alternatives?

(b) What are comparable PWs for the two alternatives?

Reference no: EM132165330

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