A city is planning to invest in potential projects with the estimated cash flows below. Given that interest rate is 4.880884817% per semiannual, determine which option is preferable if options are mutually exclusive using PW analysis. show the steps: please don't use excel

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
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A city is planning to invest in potential projects with the estimated cash flows below. Given that interest rate is 4.880884817% per semiannual, determine which option is preferable if options are mutually exclusive using PW analysis.

show the steps: please don't use excel

Alternative
C
D
First Cost
$-4200
AOC, per Year
Annual Increase in Operating Cost, per Year
Salvage Value
Life, Years
$-2300
$-350
$-40
$30
$-700
$800
Effective interest rate: i( )=
i) alternative C has life time of infinity
ii) Alternative C has 10 years life time
Transcribed Image Text:Alternative C D First Cost $-4200 AOC, per Year Annual Increase in Operating Cost, per Year Salvage Value Life, Years $-2300 $-350 $-40 $30 $-700 $800 Effective interest rate: i( )= i) alternative C has life time of infinity ii) Alternative C has 10 years life time
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