4. Alternative 1–Build gas station Alternative 2-Build soft ice-cream stand FW = Rs. 3,25,85,440 FW = Rs. 2,50,77,560 The future worth of alternative 1 is greater than that of alternative 2. Thus, building the gas station is the best alternative.
4. Alternative 1–Build gas station Alternative 2-Build soft ice-cream stand FW = Rs. 3,25,85,440 FW = Rs. 2,50,77,560 The future worth of alternative 1 is greater than that of alternative 2. Thus, building the gas station is the best alternative.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Our subject is engineering economics and the subject is economic study method
![4.) A man owns a corner plot. He must decide which of the several alternatives to select in trying
to obtain a desirable return on his investment. After much study and calculation, he decides that
the two best alternatives are as given in the following table:
Build
Build soft
ice-cream stand
First cost (Rs.)
Annual property taxes (Rs.)
Annual income (Rs.)
Life of building (years)
Salvage value (Rs.)
gas station
20,00,000
80,000
8,00,000
36,00,000
1,50,000
9,80,000
20
20
Evaluate the alternatives based on the future worth method at i = 12%.
%3D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F455299d0-571d-4c14-8f97-7e060c5b7ee6%2F6bb576a8-50c4-421a-a278-0c7c320d136d%2Fal1v8ql_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4.) A man owns a corner plot. He must decide which of the several alternatives to select in trying
to obtain a desirable return on his investment. After much study and calculation, he decides that
the two best alternatives are as given in the following table:
Build
Build soft
ice-cream stand
First cost (Rs.)
Annual property taxes (Rs.)
Annual income (Rs.)
Life of building (years)
Salvage value (Rs.)
gas station
20,00,000
80,000
8,00,000
36,00,000
1,50,000
9,80,000
20
20
Evaluate the alternatives based on the future worth method at i = 12%.
%3D
![4. Alternative 1-Build gas station
Alternative 2-Build soft ice-cream stand
FW = Rs. 3,25,85,440
FW = Rs. 2,50,77,560
The future worth of alternative 1 is greater than that of alternative 2. Thus, building the gas station
is the best alternative.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F455299d0-571d-4c14-8f97-7e060c5b7ee6%2F6bb576a8-50c4-421a-a278-0c7c320d136d%2Fdq2d3vf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. Alternative 1-Build gas station
Alternative 2-Build soft ice-cream stand
FW = Rs. 3,25,85,440
FW = Rs. 2,50,77,560
The future worth of alternative 1 is greater than that of alternative 2. Thus, building the gas station
is the best alternative.
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