Comparing MEAs with equal lives. When lives are equal adjustments to cash flows are not required. The MEAs can be compared by directly comparing their equivalent worth (PW, FW, or AW calculated using the MARR. The decision will be the same regardless of the equivalent worth method you use. For a MARR of 12%, select from among the MEAs below. Capital investment Annual revenues Annual expenses Market Value (EOL) Life (years) A -$150,000 $28,000 -$1,000 $20,000 10 Alternatives B -$85,000 $16,000 -$550 $10,000 10 C -$75,000 $15,000 -$500 $6,000 10 D -$120,000 $22,000 -$700 $11,000 10

Comparing MEAs with equal lives. When lives are equal adjustments to cash flows are not required. The MEAs can be compared by directly comparing their equivalent worth (PW, FW, or AW calculated using the MARR. The decision will be the same regardless of the equivalent worth method you use. For a MARR of 12%, select from among the MEAs below. Capital investment Annual revenues Annual expenses Market Value (EOL) Life (years) A -$150,000 $28,000 -$1,000 $20,000 10 Alternatives B -$85,000 $16,000 -$550 $10,000 10 C -$75,000 $15,000 -$500 $6,000 10 D -$120,000 $22,000 -$700 $11,000 10

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Comparing MEAs with equal lives.
When lives are equal adjustments to cash flows are not
required. The MEAs can be compared by directly comparing
their equivalent worth (PW, FW, or AW calculated using the
MARR. The decision will be the same regardless of the
equivalent worth method you use. For a MARR of 12%, select
from among the MEAs below.
Capital investment
Annual revenues
Annual expenses
Market Value (EOL)
Life (years)
A
-$150,000
$28,000
-$1,000
$20,000
10
Alternatives
B
-$85,000
$16,000
-$550
$10,000
10
-$75,000
$15,000
-$500
$6,000
10
D
-$120,000
$22,000
-$700
$11,000
10

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