1.) What are the 3 assumptions that must be considered when using the LCM approach in comparing PW of differentlife alternatives?Question 2 in image, thank you. MACHINEInitial Cost, $AOC, $ / yearAnnual Revenue, $ / yearSalvage Value, $Life, yearsGiven interest rate of 15%(a) What is the Present Worth (PW) of Machine X?(b) What is the Future Worth (FW) of Machine X?(c) What is the Capitalized Cost of machine Y?XY-275,000 -150,000-25,000 -40,000125,00065,00050,00015,00036

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1.) What are the 3 assumptions that must be considered when using the LCM approach in comparing PW of different life alternatives?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1.) What are the 3 assumptions that must be considered when using the LCM approach in comparing PW of different
life alternatives?

Question 2 in image, thank you.

MACHINE
Initial Cost, $
AOC, $ / year
Annual Revenue, $ / year
Salvage Value, $
Life, years
Given interest rate of 15%
(a) What is the Present Worth (PW) of Machine X?
(b) What is the Future Worth (FW) of Machine X?
(c) What is the Capitalized Cost of machine Y?
X
Y
-275,000 -150,000
-25,000 -40,000
125,000
65,000
50,000
15,000
3
6

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