Two mutually exculsive alternative are being considered for the environmental protection equipment at a petroleum refinary. one of these alternatives must be selected. The estimated cash flow for each alternatives are as follows. Use MARR of 10% Note: Do not round in between solutions and round up to 2 decimal places for final asnwer Asnwer the following: B. Assume the study period is shortened to Five years. The market value of Alternative B after Five years is estimated to be $15,000. Which alternative would you recommend? Use AW method.
Two mutually exculsive alternative are being considered for the environmental protection equipment at a petroleum refinary. one of these alternatives must be selected. The estimated cash flow for each alternatives are as follows. Use MARR of 10% Note: Do not round in between solutions and round up to 2 decimal places for final asnwer Asnwer the following: B. Assume the study period is shortened to Five years. The market value of Alternative B after Five years is estimated to be $15,000. Which alternative would you recommend? Use AW method.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Two mutually exculsive alternative are being considered for the environmental protection equipment at a petroleum refinary. one of these alternatives must be selected. The estimated cash flow for each alternatives are as follows. Use MARR of 10%
Note: Do not round in between solutions and round up to 2 decimal places for final asnwer
Asnwer the following:
B. Assume the study period is shortened to Five years. The market value of Alternative B after Five years is estimated to be $15,000. Which alternative would you recommend? Use AW method.
Transcribed Image Text:Alternative A
Alternative B
$20,000
$38,000
Capital Investment
Annual Expenses
5,500
4,000
Market Value at end of useful
1,000
4,200
life
Useful life
5 years
10 years
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