Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te=40%. The (GI -OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold. Alternative First Cost, $ Salvage Value, Year 4, $ GI-OE, $ per Year Recovery Period, Years X -8,000 0 3,500 3 -13,000 2,000 5,000 3 The PW for alternative X is determined to be $ The PW for alternative Yis determined to be $
Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te=40%. The (GI -OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold. Alternative First Cost, $ Salvage Value, Year 4, $ GI-OE, $ per Year Recovery Period, Years X -8,000 0 3,500 3 -13,000 2,000 5,000 3 The PW for alternative X is determined to be $ The PW for alternative Yis determined to be $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable
rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te=40%. The (GI
-OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold.
Alternative
First Cost, $
Salvage Value, Year 4,
$
GI-OE, $ per Year
Recovery Period, Years
X
-8,000
0
3,500
3
Y
-13,000
2,000
5,000
3
The PW for alternative X is determined to be $
The PW for alternative Y is determined to be $
Alternative (Click to select) is selected.
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