The cash flows given in table below are for two different alternatives. MARR =10

Question

The cash flows given in table below are for two different alternatives. MARR =10%

Data

M

N

Initial Cost

$20,000

$80,000

Uniform Annual Benefits

$6,000

$10,000

Salvage Value

$5,000

$20,000

Useful Life in years

5

infinity

The equivalent uniform annual worth (EUAW) of alternative M may be expressed as below.

-6,000 - 5,000(A/F, 10%, 5 + {20,000(A/P, 10%, 5)}

6,000 - {20,000(A/P, 10%, 5) + 5,000(A/F, 10%, 5)}

6,000 - {20,000 (1.15)-4 - 5,000(1.10)4}

-20,000(A/P, 10%, 5) + 5,000(A/F, 10%, 5) + 6,000

Data

M

N

Initial Cost

$20,000

$80,000

Uniform Annual Benefits

$6,000

$10,000

Salvage Value

$5,000

$20,000

Useful Life in years

5

infinity

Explanation / Answer

D.

-20,000(A/P, 10%, 5) + 5,000(A/F, 10%, 5) + 6,000

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