Two mutually exclusive alternatives are being considered for company's use. One of these alternatives must be selected. The firm's MARR is 20% per year. The estimated cash flows for each alternative are as follows: Altemative 1 Alternative 2 Capital investment Annual expenses Useful life(years) Market value(at end of useful life) $20,000 5,500 $38.000 4,000 5 $1.000 10 $4,200 Which equipment alternative should be selected using NPW-C with a study period of 10 years? Assume the study period is shortened to five years. Which alternative would you recommend using NPW-C?

Two mutually exclusive alternatives are being considered for company's use. One of these alternatives must be selected. The firm's MARR is 20% per year. The estimated cash flows for each alternative are as follows: Altemative 1 Alternative 2 Capital investment Annual expenses Useful life(years) Market value(at end of useful life) $20,000 5,500 $38.000 4,000 5 $1.000 10 $4,200 Which equipment alternative should be selected using NPW-C with a study period of 10 years? Assume the study period is shortened to five years. Which alternative would you recommend using NPW-C?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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