Question

In: Economics

given the following data. use present worth analysis to find the best alternative, A, B, or...

given the following data. use present worth analysis to find the best alternative, A, B, or C.

Use an analysis period of 12 years and 15% interest.

A B C

Initial cost $10,000 15,000 $12,000

Annual Benefit 6,000 10,000 5,000

Salvage benefit 1,000 -2,000 3,000

Useful life 2 years 3 years 4 years

* Use an analysis period of 12 years and 15% interest.

solve using both present worth analysis and annual worth analysis

Solutions

Expert Solution

Calculating the present worth of the three alternatives

Calculating the PW of B

Calculating the PW of alternative C.

On the basis of PW analysis the alternative B must be selected.

Now calculating the annual worth.

Annual worth of B

Calculating the annual worth of X.

On the basis of AW alternative B must be selected.

I have solved it using excel function too got the same value kindly refer the attached image.

Please contact if having any query will be obliged to you for your generous support. Your help mean a lot to me, please help. Thank you.

Rahul Sunny answered 1 year ago
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