5-73 Given the following data, use present worth analysis to find the best alternative, A, B, or C. A B Initial cost Annual benefit Salvage value Useful life $10,000 6,000 1,000 2 years C 15,000 $12,000 10,000 5,000 -2,000 3,000 3 years 4 years Use an analysis period of 12 years and 10% interest.

5-73 Given the following data, use present worth analysis to find the best alternative, A, B, or C. A B Initial cost Annual benefit Salvage value Useful life $10,000 6,000 1,000 2 years C 15,000 $12,000 10,000 5,000 -2,000 3,000 3 years 4 years Use an analysis period of 12 years and 10% interest.

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

5-73 Given the following data, use present worth analysis
to find the best alternative, A, B, or C.
A
B
Initial cost
Annual benefit
Salvage value
Useful life
$10,000
6,000
1,000
2 years
15,000
10,000
-2,000
3 years
C
$12,000
5,000
3,000
4 years
Use an analysis period of 12 years and 10% interest.

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Step 1: Determine the given information:

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Step 2: Determine the present value of alternative A:

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Step 3: Determine the present value of alternative B:

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Step 4: Determine the present value of alternativ C:

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Step 5: Determine the best alternative:

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