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 X Y First Cost, $ -8,000 -13,000 Salvage Value, Year 4, $ 0 2,000 GI-OE, $ per Year 3,500 5,000 Recovery Period, Years 3 3 The PW for alternative X is determined to be $ The PW for alternative Yis determined to be $

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Question
None
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
X
Y
First Cost, $
-8,000
-13,000
Salvage Value, Year 4, $
0
2,000
GI-OE, $ per Year
3,500
5,000
Recovery Period, Years
3
3
The PW for alternative X is determined to be $
The PW for alternative Yis determined to be $
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 X Y First Cost, $ -8,000 -13,000 Salvage Value, Year 4, $ 0 2,000 GI-OE, $ per Year 3,500 5,000 Recovery Period, Years 3 3 The PW for alternative X is determined to be $ The PW for alternative Yis determined to be $
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