Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 4.5 % / year. Based on the data below, perform an appropriate analysis to select the most economical alternative. Assume that the market value grows at the general inflation rate. Alternative A Initial investment Annual revenue (actual $) Annual cost (actual $) Market value at end of useful life (year 0 $) Useful life, years $170,000 $43,000 $3,000 in year 1 increasing by $300 each year for remaining years $25,000 5 $240,000 $48,000 $4,000 Alternative B $38,000 7 Click the icon to view the interest and annuity table for discrete compounding when / 15% per year. The AW of Alternative A is (Round to the nearest dollar.)
Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 4.5 % / year. Based on the data below, perform an appropriate analysis to select the most economical alternative. Assume that the market value grows at the general inflation rate. Alternative A Initial investment Annual revenue (actual $) Annual cost (actual $) Market value at end of useful life (year 0 $) Useful life, years $170,000 $43,000 $3,000 in year 1 increasing by $300 each year for remaining years $25,000 5 $240,000 $48,000 $4,000 Alternative B $38,000 7 Click the icon to view the interest and annuity table for discrete compounding when / 15% per year. The AW of Alternative A is (Round to the nearest dollar.)
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
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Please help me stepwise sir thanks a lot. For both the alternative find and also tell which is best.
Transcribed Image Text:Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 4.5% / year. Based on the data below, perform an
appropriate analysis to select the most economical alternative. Assume that the market value grows at the general inflation rate.
Alternative A
Alternative B
Initial investment
Annual revenue (actual $)
Annual cost (actual $)
Market value at end of useful life (year 0 $)
Useful life, years
$170,000
$43,000
$3,000 in year 1 increasing
by $300 each year for
remaining years
$25,000
5
$240,000
$48,000
$4,000
$38,000
7
Click the icon to view the interest and annuity table for discrete compounding when /= 15% per year.
The AW of Alternative A is. (Round to the nearest dollar.)
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