An appraisal is being carried out for two alternative projects with the cash flows shown below. Using Present Worth analysis, at what level of initial investment will Project A be as attractive as Project B? Use a discount rate of 10% per year. Project A Project B Initial Investment ? $70,000 $1,000 Yearly operating cost Major Maintenance (every 3 years) Yearly revenue $1,500 $5,000 $3,000 $15,000 $30,000 Life 4 years 3 years
An appraisal is being carried out for two alternative projects with the cash flows shown below. Using Present Worth analysis, at what level of initial investment will Project A be as attractive as Project B? Use a discount rate of 10% per year. Project A Project B Initial Investment ? $70,000 $1,000 Yearly operating cost Major Maintenance (every 3 years) Yearly revenue $1,500 $5,000 $3,000 $15,000 $30,000 Life 4 years 3 years
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:4. Engineering Economics:
An appraisal is being carried out for two alternative projects with the cash flows
shown below. Using Present Worth analysis, at what level of initial investment
will Project A be as attractive as Project B? Use a discount rate of 10% per year.
Project A
Project B
Initial Investment
?
$70,000
$1,000
Yearly operating cost
Major Maintenance
(every 3 years)
$1,500
$5,000
$3,000
Yearly revenue
$15,000
$30,000
Life
4 years
3 years
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