The cash flows given in table below are for two different alternatives. MARR (i)

Question

The cash flows given in table below are for two different alternatives. MARR (i) 10% Data S20,000 580 000 Initial Cost Uniform Annual Benefits $6,000 S10,000 $5,000 $20,000 Salvage Value Useful Life in years 4 4. Calculate the equivalent uniform annual worth (EUAw) of alternative M choosing correct expression below. As 6,000- (20,000 (1.15) -5,000(1.10% 20,000(AMP, 10%, 5) 5,000(AF, 10%, 5) 6,000 6,000 (20,000(AVP, 10%, 5) 5,000(AJF, 10%, 5) D. -6,000 5,000(AF, 10%, 5 (20,000(A/P, 10%, 5) 5. The equivalent uniform annual worth (EUAW) of alternative Nis Hint: Salvage value never realized. A. $1,762 B. $2,476 C. $1,920 D. $2,000

Explanation / Answer

Equivalent Uniform Annual Worth (EUAW) is calculated by the following formula: EUAW = -Initial Cost(A/P, i, N)+Salvage Value(A/F, I, N)+Annual benefits Thus, Option 1 is correct NOTE : Option 2 could be correct but the time period is used as 5 years instead of 4

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