Consider these two alternatives Alternative 1 Alternative 2 Capital investment $4,300 $1.000 $370 Annual revenues Annual expenses Estimated market value Useful life 9000 $1,300 9 years 10 years a. Suppose that the capital investment of Attematve 1 is known with certainty By how much would the estimate of capital investment for Alternative 2 have to vary so that the mital dicson based on these data would be reversed? The annual MARR is 10% per year. b. Determine the life of Alternative 1 for which the AWS are equal Cick the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year $5.000 $2.050 $400
Consider these two alternatives Alternative 1 Alternative 2 Capital investment $4,300 $1.000 $370 Annual revenues Annual expenses Estimated market value Useful life 9000 $1,300 9 years 10 years a. Suppose that the capital investment of Attematve 1 is known with certainty By how much would the estimate of capital investment for Alternative 2 have to vary so that the mital dicson based on these data would be reversed? The annual MARR is 10% per year. b. Determine the life of Alternative 1 for which the AWS are equal Cick the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year $5.000 $2.050 $400
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Consider these two allematives
Capital investment
Annual revenues
Annual expenses
Estimated market value
Alternative 1 Alternative 2
$4,300
$5,000
$1,000
$2.050
$3/0
$400
$1,300
Useful life
10 years
a. Suppose that the capital investment of Alterative 1 is known with certainty By how much would the estimate of capital investment for Alternative 2 have to vary so that the mital decision based on these
data would be reversed? The annual MARR is 18% per year
b. Determine the life of Alternative 1 for which the AWS are equal
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year
5000
9 years
CHOD)
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