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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

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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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
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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