PVV (12%) $45,252 $42,591 IRR 15% 18% Project th It R15 S19 ree mutually exclusi

Question

PVV (12%) $45,252 $42,591 IRR 15% 18% Project th It R15 S19 ree mutually exclusive design alternat iv 6-4. Th being considered. The estimated sales and cost data f es es are Investment cost $30,000 $60,000 $50,000 Estimated units 15,000 20,000 18,000 Estimated units 15,000 20,000 1 to be sold/year Unit selling price, %3.50 $4.40 $4.10 $/unit Variable costs, $/unit $1.00 $1.40 $1.15 Annual expenses $15,000 $30,000 $26,00 (fixed) Market value Useful life 0 $20,000 $15,000 10 years 10 years 10 years

Explanation / Answer

PW = -Investmen cost(A/P,20%,10) + Market Value (A/F, 20%,10) - Annual Saving

As AW1>AW3>AW2 so AW1 is rge best alternative

IC 30000 60000 50000 Units 15000 20000 18000 P 3.5 4.4 4.1 VC 1 1.4 1.15 AFC 15000 30000 26000 MV 0 20000 15000 Y 10 10 10 Annual Revenue 52500 88000 73800 Annual expense 30000 58000 46700 Annual saving 22500 30000 27100 IC*(A/P,20%,10) 4770.46 14311.37 11926.14 MV*(A/F,20%,10) 0 770.46 577.84 PW -27270.46 -43540.91 -38448.3

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