The following data is available for three different alternatives. Assume an interest rate of 9% per year, compounded annually. Alternative A 5,000 725 infinite Initial Cost Annual Benefit Useful Life (yrs) Alternative B Choose Alternative A because it lasts the longest 2,100 1,681 10 Alternative C 10,000 4,313 5 Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The following data is available for three different alternatives.
Assume an interest rate of 9% per year, compounded annually.
Alternative A
5,000
725
infinite
Initial Cost
Annual Benefit
Useful Life (yrs)
Alternative B
2,100
1,681
10
Choose Alternative A because it lasts the longest
Alternatives B and C are replaced at the end of their useful lives with identical replacements.
Using present worth analysis, find the best alternative.
Alternative C
10,000
4,313
5
Choose Alternative A because its net present worth is postive
Choose Alternative C because its net present worth is $4,323.68 more than its nearest competitor
Choose Alterntive C because it has the highest annual benefit
Transcribed Image Text:The following data is available for three different alternatives. Assume an interest rate of 9% per year, compounded annually. Alternative A 5,000 725 infinite Initial Cost Annual Benefit Useful Life (yrs) Alternative B 2,100 1,681 10 Choose Alternative A because it lasts the longest Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative. Alternative C 10,000 4,313 5 Choose Alternative A because its net present worth is postive Choose Alternative C because its net present worth is $4,323.68 more than its nearest competitor Choose Alterntive C because it has the highest annual benefit
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