Recalculate question 11 with the following modifications: Project A: Add a residual value of $100,000 in year 10. Project B: Add a residual value of $60,000 in year 10. Project C: Move the residual value from the ninth year to the tenth year.
a. At a 16% cost of capital and using an appropriate decision-making technique, recommend which project should be selected. How much better is the chosen alternative over the worst alternative?
b. If a new lower cost of capital equal to 11% is used, what decision do you reach?
