Your company is considering three mutually exclusiveinvestments as described in the table below. Based on a15-year study period and 9% MARR, you are tasked todetermine which investment should be selected.Investment Option 1:• Initial Investment: $34,000• Net Annual Revenue: $10,500• Salvage Value: $2,000• Useful Life: 18Investment Option 2:• Initial Investment: $62,000• Net Annual Revenue: $11,500• Salvage Value: $3,000• Useful Life: 15Investment Option 3:• Initial Investment: $46,000• Net Annual Revenue: $14,500• Salvage Value: $4,000• Useful Life: 8Note: The repeatability assumption cannot be applied.int: imputed market value technique will need to beapplied to Investment 1 and assume cotermination at 15-years with reinvestment for Investment 3.What is the PW of the Investment option 3?

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What is the PW of the Investment option 3?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

Your company is considering three mutually exclusive
investments as described in the table below. Based on a
15-year study period and 9% MARR, you are tasked to
determine which investment should be selected.
Investment Option 1:
• Initial Investment: $34,000
• Net Annual Revenue: $10,500
• Salvage Value: $2,000
• Useful Life: 18
Investment Option 2:
• Initial Investment: $62,000
• Net Annual Revenue: $11,500
• Salvage Value: $3,000
• Useful Life: 15
Investment Option 3:
• Initial Investment: $46,000
• Net Annual Revenue: $14,500
• Salvage Value: $4,000
• Useful Life: 8
Note: The repeatability assumption cannot be applied.
int: imputed market value technique will need to be
applied to Investment 1 and assume cotermination at 15-
years with reinvestment for Investment 3.
What is the PW of the Investment option 3?

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