Submitted bids to develop a new video display technology
Business Economics
Two competing companies have submitted bids to develop a new video display technology. The yearly development cost of Alpha expressed in actual dollars will be $150,000 the first year and increase by 4% per year over the five year contract. Beta has proposed a development cost, expressed in constant dollars, of $150,000 per year over the five year period. If the corporate MARR (investment at market rate) is 20% and the general price inflation is assumed to be 4.0% over the next five years, what is the NPW of Beta minus the NPW of Alpha? A) $4,727 B) $7,682 C) $14,636 D) $27,644
