Please solve this question.There are two alternatives for a construction firm to purchase a road roller which will be used for the construction of a highway section. The cash flow details of the alternatives are as follows;Alternative-1: Initial purchase cost = Rs.1,500,000, Annual operating cost = Rs.35,000 starting from the end of year “2” (negligible in the first year) till the end of useful life, Annual revenue to be generated = Rs.340,000 for first 4 years and then Rs.320,000 afterwards till the end of useful life, Expected salvage value = Rs.430,000, Useful life = 8 years.Alternative-2: Initial purchase cost = Rs.1,800,000, Annual operating cost = Rs.25,000, Annual revenue to be generated = Rs.365,000, Expected salvage value = Rs.550,000, Useful life = 8 years.Evaluate these alternatives & find out the most economical alternative on the basis of equivalent future worth at the interest rate of 9.5% per year. There are two alternatives for a construction firm to purchase a road roller which willbe used for the construction of a highway section. The cash flow details of thealternatives are as follows;Alternative-1: Initial purchase cost = Rs.1,500,000, Annual operating cost = Rs.35,000starting from the end of year "2" (negligible in the first year) till the end of useful life,Annual revenue to be generated = Rs.340,000 for first 4 years and then Rs.320,000afterwards till the end of useful life, Expected salvage value = Rs.430,000, Useful life =8 years.25Alternative-2: Initial purchase cost = Rs.1,800,000, Annual operating cost = Rs.25,000,Annual revenue to be generated = Rs.365,000, Expected salvage value = Rs.550,000,Useful life = 8 years.Evaluate these alternatives & find out the most economical alternative on the basis ofequivalent future worth at the interest rate of 9.5% per year.

In the future worth method for comparison of mutually exclusive alternatives, the equivalent future…

Answered: There are two alternatives for a…

Structural Analysis

6th Edition

ISBN:9781337630931

Author:KASSIMALI, Aslam.

Publisher:KASSIMALI, Aslam.

Chapter2: Loads On Structures

Section: Chapter Questions

Problem 1P

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Please solve this question. There are two alternatives for a construction firm to purchase a road roller which will be used for the construction of a highway section. The cash flow details of the alternatives are as follows; Alternative-1: Initial purchase cost = Rs.1,500,000, Annual operating cost = Rs.35,000 starting from the end of year “2” (negligible in the first year) till the end of useful life, Annual revenue to be generated = Rs.340,000 for first 4 years and then Rs.320,000 afterwards till the end of useful life, Expected salvage value = Rs.430,000, Useful life = 8 years. Alternative-2: Initial purchase cost = Rs.1,800,000, Annual operating cost = Rs.25,000, Annual revenue to be generated = Rs.365,000, Expected salvage value = Rs.550,000, Useful life = 8 years. Evaluate these alternatives & find out the most economical alternative on the basis of equivalent future worth at the interest rate of 9.5% per year.

There are two alternatives for a construction firm to purchase a road roller which will
be used for the construction of a highway section. The cash flow details of the
alternatives are as follows;
Alternative-1: Initial purchase cost = Rs.1,500,000, Annual operating cost = Rs.35,000
starting from the end of year "2" (negligible in the first year) till the end of useful life,
Annual revenue to be generated = Rs.340,000 for first 4 years and then Rs.320,000
afterwards till the end of useful life, Expected salvage value = Rs.430,000, Useful life =
8 years.
2
5
Alternative-2: Initial purchase cost = Rs.1,800,000, Annual operating cost = Rs.25,000,
Annual revenue to be generated = Rs.365,000, Expected salvage value = Rs.550,000,
Useful life = 8 years.
Evaluate these alternatives & find out the most economical alternative on the basis of
equivalent future worth at the interest rate of 9.5% per year.

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