The MARR is 12% per year. Alternative 1 Alternative 2 First cost, $ -40,000 -65,000 Annual cost, $ per year -20,000 - 15,000 Salvage value, $ 10,000 25,000 Life, years 3 4
The MARR is 12% per year. Alternative 1 Alternative 2 First cost, $ -40,000 -65,000 Annual cost, $ per year -20,000 - 15,000 Salvage value, $ 10,000 25,000 Life, years 3 4
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
The relation that correctly calculates the present worth of alternative 2 when comparing it to alternative 1 is:
a. -65,000 - 15,000(P/A,12%,12) + 25,000(P/F,12%,8) + 25,000(P/F,12%,12)
b. -65,000 - 15,000(P/A,12%,4) + 25,000(P/F,12%,4)
c. -65,000 - 15,000(P/A,12%,12) + 25,000(P/F,12%,12)
d. -65,000 -40,000[(P/F,12%,4) + (P/F,12%,8)] -15,000(P/A,12%,12) +25,000(P/F,12%,12)
Transcribed Image Text:The MARR is 12% per year.
Alternative 1 Alternative 2
First cost, $
-40,000
-65,000
Annual cost, $ per year
-20,000
- 15,000
Salvage value, $
10,000
25,000
Life, years
3
4
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