The following data is available for three different alternatives. Alternatives B

Question

The following data is available for three different alternatives. Alternatives B and C are replaced at the end of their useful lives with identical replacements.

Using present worth analysis, find the best alternative. Please Show Work.

Alternative The following data is available for threeData different alternatives. Alternatives B and C are replaced at the end of their useful lives with identical replacements Using present worth analysis, find the best alternative. Initial Cost Uniform Annual S1,000 S1,500 S2,000 S200 S276.20 S654.80 -eful Life in years 110 Interest Rate 1290

Explanation / Answer

The present worh for A is -1000+200(1/1.12+1/1.12^2+1/1.12^3+...)=667

The present worth for B is -1500+276.2(1/1.12+1/1.12^2+...+1/1.1^210)=60

The present worth for C is -2000+654.8(1/1.12+1/1.12^2+...1/1.12^5)=360

So, the project A is the most profitable.

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