Given the data in the table below, choose the better alternative-using present w
ID: 1098962 • Letter: G
Question
Given the data in the table below, choose the better alternative-using present worth analysis if MARR is 8%.
Data
Alternative
A
B
Initial Cost
$10,000
$9,000
Annual Benefits
$5,200
$4,700
Annual Expenses
$3,000
$2,000
Salvage Value
$1,200
$1,300
Useful Life in Years
6
4
Alternative B, $1,510
Alternative A, $1,510
Alternative B, $2,040
Alternative A, $2,040
Data
Alternative
A
B
Initial Cost
$10,000
$9,000
Annual Benefits
$5,200
$4,700
Annual Expenses
$3,000
$2,000
Salvage Value
$1,200
$1,300
Useful Life in Years
6
4
Explanation / Answer
For A
PW = - 10,000 + 5200*(P/A , 8 %, 6) - 3000*(P/A , 8 %, 6) + 1200*(P/F,8%,6)
PW = $ 926.5388
For B
PW = - 9,000 + 4700*(P/A , 8 %, 4) - 2000*(P/A , 8 %, 4) + 1300*(P/F,8%,4)
PW = $ 898.28
Alternative A
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