Which alternative should be selected? Choose the correct answer below.

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter4: Time Value Of Money
Section: Chapter Questions
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Consider the following EOY cash flows for two mutually exclusive alternatives (one must be chosen). The MARR is 4% per year.
Lead Acid
Lithium lon
Capital investment
Annual expenses
$7,000
$2,250
12 years
$0
$13,000
$2,500
18 years
$2,600
Useful life
Market value at end of useful life
Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year.
Determine which alternative should be selected based on the PW method. Assume repeatability and use a study period of 36
years.
The PW of the Lead Acid is $ - 56600 . (Round to the nearest hundreds.)
The PW of the Lithium lon is $
65400. (Round to the nearest hundreds.)
Which alternative should be selected? Choose the correct answer below.
Lithium lon
Lead Acid
Transcribed Image Text:Consider the following EOY cash flows for two mutually exclusive alternatives (one must be chosen). The MARR is 4% per year. Lead Acid Lithium lon Capital investment Annual expenses $7,000 $2,250 12 years $0 $13,000 $2,500 18 years $2,600 Useful life Market value at end of useful life Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year. Determine which alternative should be selected based on the PW method. Assume repeatability and use a study period of 36 years. The PW of the Lead Acid is $ - 56600 . (Round to the nearest hundreds.) The PW of the Lithium lon is $ 65400. (Round to the nearest hundreds.) Which alternative should be selected? Choose the correct answer below. Lithium lon Lead Acid
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