A company is evaluating two alternatives to produce a new product. The initial cost of Alt Alpha is $-160,000, with an annual $10,000. The initial cost of Alt maintenance and operations cost of $-40,000, and final salvage value at the end of year 2 Timore is $-500,000, with an annual maintenance and operations cost of $-10,000, and final salvage value at the end of year 4 of $33,000. Assume a MARR of 19% per year. Calculate the present worth of each alternative. The present worth for Alt Alpha is $ The present worth for Alt Timore is $ Select
A company is evaluating two alternatives to produce a new product. The initial cost of Alt Alpha is $-160,000, with an annual $10,000. The initial cost of Alt maintenance and operations cost of $-40,000, and final salvage value at the end of year 2 Timore is $-500,000, with an annual maintenance and operations cost of $-10,000, and final salvage value at the end of year 4 of $33,000. Assume a MARR of 19% per year. Calculate the present worth of each alternative. The present worth for Alt Alpha is $ The present worth for Alt Timore is $ Select
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
Problem 1PS
Related questions
Question
WHY IS THE ANSWER WRONG ? HELP FIND THE CORRECT ANSWER FOR ALT ALPHA (not a graded assignment but for practice).
Present worth for Alt Timore :
-500,000 -10,000(P/A,19%,4) + 33,000(P/F,19%,4) = -509933 ---> Correct answer
Applying the same formula to find Present worth Alt Alpha :
-160,000 - 40,000(P/A,19%,2) + 10,000(P/F,19%,2) = -214818 ----> Wrong answer
Transcribed Image Text:A company is evaluating two alternatives to produce a new product. The initial cost of Alt Alpha is $-160,000, with an annual
maintenance and operations cost of $-40,000, and final salvage value at the end of year 2 of $10,000. The initial cost of Alt
Timore is $-500,000, with an annual maintenance and operations cost of $-10,000, and final salvage value at the end of year
4 of $33,000. Assume a MARR of 19% per year.
Calculate the present worth of each alternative.
The present worth for Alt Alpha is $
The present worth for Alt Timore is $
Select
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