Using i of 6.5%, compare the net present worth of the net expenditures for the two proposed plans and select which plan is the most economical plan and Why. Plan A requires an initial investment of $41,500. This will be followed by an investment of $18,000 at the end of 4 years. During the first 4 years, annual expenditures will be $7,000, and during the final 4 years, they will be $9,000. There will be a $10,000 salvage value at the end of the 8th year. Plan B requires an initial investment of $25,000. This will be followed by an investment of $8,500 at the end of 3 years and an investment of $5,000 at the end of 7 years. During the first 3 years, annual expenditures will be $4,250, and during the second 3 years, they will be $7,000. The final 2 years' expenditures will be $11,000. There will be no salvage value at the end of the 8thyear.
Using i of 6.5%, compare the net present worth of the net expenditures for the two proposed plans and select which plan is the most economical plan and Why.
Plan A requires an initial investment of $41,500. This will be followed by an investment of $18,000 at the end of 4 years. During the first 4 years, annual expenditures will be $7,000, and during the final 4 years, they will be $9,000. There will be a $10,000 salvage value at the end of the 8th year.
Plan B requires an initial investment of $25,000. This will be followed by an investment of $8,500 at the end of 3 years and an investment of $5,000 at the end of 7 years. During the first 3 years, annual expenditures will be $4,250, and during the second 3 years, they will be $7,000. The final 2 years' expenditures will be $11,000. There will be no salvage value at the end of the 8thyear.
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