A company with a Minimum Attractive Rate of Return (MARR) of 10% is considering two mutually exclusive options. Neither option has a salvage value. The two options have different lives. Like replacement will be assumed, with a 15-year horizon. The cash flow for one cycle for each option is shown below.| | Option #1 | Option #2 ||-------------------|-----------|-----------|| First Cost | $35,000 | $42,000 || Annual Benefits | $20,000 | $15,000 || Life | 3 years | 5 years |When performing an Equivalent Annual Cash Flow Analysis, the Equivalent Uniform Annual (EUA) Benefit-Cost (B-C) for Option #1 is closest to:- a. $5,925- b. $9,280- c. $12,720- d. $34,070

Here , we need to find out net present value first and then divided it with discount factor.

A company with a MARR = 10% is considering two mutually exclusive options. Neither option has a salvage value. The two options have different lives. Like replacement will be assumed, with a 15 year horizon. The cash flow for one cycle for each option is shown below. First Cost Annual Benefits Life Option #1 $35,000 $20,000 3 years Option #2 $42,000 $15,000 5 years When performing an EQUIVALENT ANNUAL CASH FLOW ANALYSIS, the EUA(B-C) for Option #1 is closest to: O a. $5,925 O b. $9,280 O C. $12,720 O d. $34,070

A company with a MARR = 10% is considering two mutually exclusive options. Neither option has a salvage value. The two options have different lives. Like replacement will be assumed, with a 15 year horizon. The cash flow for one cycle for each option is shown below. First Cost Annual Benefits Life Option #1 $35,000 $20,000 3 years Option #2 $42,000 $15,000 5 years When performing an EQUIVALENT ANNUAL CASH FLOW ANALYSIS, the EUA(B-C) for Option #1 is closest to: O a. $5,925 O b. $9,280 O C. $12,720 O d. $34,070

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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