2.) Three mutually exclusive alternatives are being considered. Initial investment cost Annual net income Rate of Return ii) A $43,000 B $24,000 $4,150 $2500 7.3% 8.3% Each alternative has a 20 year useful life and no salvage value C $17,000 $1700 6.0% Calculate the PW of the three alternatives over an interest rate of 1 to 60%, construct a choice table for interest rates from 1 to 60% (1, 10, 20, ....60%). If the minimum attractive rate of return is 7% which alternative should be selected?

2.) Three mutually exclusive alternatives are being considered. Initial investment cost Annual net income Rate of Return ii) A $43,000 B $24,000 $4,150 $2500 7.3% 8.3% Each alternative has a 20 year useful life and no salvage value C $17,000 $1700 6.0% Calculate the PW of the three alternatives over an interest rate of 1 to 60%, construct a choice table for interest rates from 1 to 60% (1, 10, 20, ....60%). If the minimum attractive rate of return is 7% which alternative should be selected?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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