You have identified three alternatives for a small project at your plant. The interest rate is 4.8808848 % per semiannual. Alternative F Initial Cost, $ 180,000 Salvage Value, $ 80,000 Annual Cost, $ 16,000 Annual Revenue,$ 86,000 Life, years 4 G H 100,000 120,000 12,000 18,000 12,000 10,000 70,000 60,000 3 a) (15 pts) What is the LCM of the life of three alternatives if alternative H has a project life of 11 year? Which alternative should be selected? b) Which alternative should be selected if alternative H has an infinite life?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Please show factors and do not use excel.
You have identified three alternatives for a small project at your plant. The interest rate is
4.8808848 % per semiannual.
Alternative
F
Initial Cost, $
180,000
Salvage Value, $
80,000
Annual Cost, $
16,000
Annual Revenue,$
86,000
Life, years
4
G
H
100,000
120,000
12,000
18,000
12,000
10,000
70,000
60,000
3
a) (15 pts) What is the LCM of the life of three alternatives if alternative H has a project
life of 11 year? Which alternative should be selected?
b) Which alternative should be selected if alternative H has an infinite life?
Transcribed Image Text:You have identified three alternatives for a small project at your plant. The interest rate is 4.8808848 % per semiannual. Alternative F Initial Cost, $ 180,000 Salvage Value, $ 80,000 Annual Cost, $ 16,000 Annual Revenue,$ 86,000 Life, years 4 G H 100,000 120,000 12,000 18,000 12,000 10,000 70,000 60,000 3 a) (15 pts) What is the LCM of the life of three alternatives if alternative H has a project life of 11 year? Which alternative should be selected? b) Which alternative should be selected if alternative H has an infinite life?
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