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10. An elective project is currently under review. The first alternative requires an initial investment of $60,000 for equipment. The annual revenues and expenses are expected to be $36,000 and $20,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $14,000. The PW of this alternative is $17,587. The second alternative requires an initial investment of $116,000 for equipment. The annual revenues and expenses are expected to be $38,000 and $10,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $22,000. Find the preferred alternative using PW analysis, assuming a MARR of 10%. (Find the PW directly - do not convert from either FW or AW.) Justify your conclusion.

10. An elective project is currently under review. The first alternative requires an initial investment of $60,000 for equipment. The annual revenues and expenses are expected to be $36,000 and $20,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $14,000. The PW of this alternative is $17,587. The second alternative requires an initial investment of $116,000 for equipment. The annual revenues and expenses are expected to be $38,000 and $10,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $22,000. Find the preferred alternative using PW analysis, assuming a MARR of 10%. (Find the PW directly - do not convert from either FW or AW.) Justify your conclusion.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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10. An elective project is currently under review. The first alternative requires an initial investment of $60,000 for equipment. The annual revenues and expenses are expected to be $36,000 and $20,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $14,00O. The PW of this alternative is $17,587. The second alternative requires an initial investment of $116,000 for equipment. The annual revenues and expenses are expected to be $38,000 and $10,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $22,000. Find the preferred alternative using PW analysis, assuming a MARR of 10%. (Find the PW directly - do not convert from either FW or AW.) Justify your conclusion.
Transcribed Image Text:10. An elective project is currently under review. The first alternative requires an initial investment of $60,000 for equipment. The annual revenues and expenses are expected to be $36,000 and $20,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $14,00O. The PW of this alternative is $17,587. The second alternative requires an initial investment of $116,000 for equipment. The annual revenues and expenses are expected to be $38,000 and $10,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $22,000. Find the preferred alternative using PW analysis, assuming a MARR of 10%. (Find the PW directly - do not convert from either FW or AW.) Justify your conclusion.
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