Assume an interest rate of 9% per year, compounded annually. Alternative A 4,000 800 infinite Initial Cost Annual Benefit Useful Life (yrs) Alternative B 2,300 1,627 16 Alternative C 8,000 3,027 8 Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative. Choose Alternative C because its net present worth is $2,566.24 more than its nearest competitor Choose Alternative A because its net present worth is postive Choose Alternative A because it lasts the longest Choose Alterntive C because it has the highest annual benefit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please help me with show all calculation thanku 

The following data is available for three different alternatives.
Assume an interest rate of 9% per year, compounded annually.
Alternative A
4,000
800
infinite
Initial Cost
Annual Benefit
Useful Life (yrs)
Alternative B
2,300
1,627
16
Alternative C
8,000
3,027
8
Alternatives B and C are replaced at the end of their useful lives with identical replacements.
Using present worth analysis, find the best alternative.
Choose Alterntive C because it has the highest annual benefit
Choose Alternative C because its net present worth is $2,566.24 more than its nearest competitor
Choose Alternative A because its net present worth is postive
Choose Alternative A because it lasts the longest
Transcribed Image Text:The following data is available for three different alternatives. Assume an interest rate of 9% per year, compounded annually. Alternative A 4,000 800 infinite Initial Cost Annual Benefit Useful Life (yrs) Alternative B 2,300 1,627 16 Alternative C 8,000 3,027 8 Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative. Choose Alterntive C because it has the highest annual benefit Choose Alternative C because its net present worth is $2,566.24 more than its nearest competitor Choose Alternative A because its net present worth is postive Choose Alternative A because it lasts the longest
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Effective Annual Rate Of Return
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education