let's discuss two alternatives using present worth analysis. You have two alternatives for computer software your company is planning on using for planning and evaluation of component analysis for safety projects. Both have projected lives of 9 years.

Option 1 has an initial purchase price of $41,014 and an annual operating cost of $5500. You have the potential to have an annual benefit each year of $11,000. You have a quoted interest rate of 4%.

Option 2 has an initial purchase price of $33,800 and an annual operating cost of $5900. You have the potential to have an annual benefit of $12,500 annually. You have a quoted interest rate of 5.2%.

Your task this week is to talk through what you would need to do to compare these two alternatives.

Answer rating: 100% (QA)

To compare the two alternatives using present worth analysis we need to calculate the present worth ... View the full answer