determine the most economic alternative using AW analysis at 12% per year. Give an explanation and draw the results. TABLE 8.1 Competing Alternatives with Three Estimates forSelected ParametersFirstSalvageValue,$LifeCost,$АОС,$п,StrategyYearsAlternative AP- 20,000-11,0003Estimates ML- 20,000-9,0005- 20,000-5,0008Alternative BP- 15,000500-4,000Estimates ML-15,0001,000-3,5004-15,0002,000-2,0007Alternative CP- 30,0003,000-8,0003Estimates ML- 30,0003,000-7,0007- 30,0003,000-3,500P =pessimistic; ML = most likely; O = optimistic.

To calculate annual growth then compare two or more alternatives by the annual worth method.…

TABLE 8.1 Competing Alternatives with Three Estimates for Selected Parameters First Salvage Value, Life Cost, $ АОС, n, Strategy Years Alternative A - 20,000 -11,000 3 Estimates ML -20,000 -9,000 - 20,000 -5,000 8. Alternative B P - 15,000 500 -4,000 2 Estimates ML -15,000 1,000 -3,500 4 -15,000 2,000 -2,000 7 Alternative C - 30,000 3,000 -8,000 3 Estimates ML - 30,000 3,000 -7,000 7 - 30,000 3,000 -3,500 P = pessimistic; ML = most likely; 0 = optimistic.

TABLE 8.1 Competing Alternatives with Three Estimates for Selected Parameters First Salvage Value, Life Cost, $ АОС, n, Strategy Years Alternative A - 20,000 -11,000 3 Estimates ML -20,000 -9,000 - 20,000 -5,000 8. Alternative B P - 15,000 500 -4,000 2 Estimates ML -15,000 1,000 -3,500 4 -15,000 2,000 -2,000 7 Alternative C - 30,000 3,000 -8,000 3 Estimates ML - 30,000 3,000 -7,000 7 - 30,000 3,000 -3,500 P = pessimistic; ML = most likely; 0 = optimistic.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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