Question: Consider three investment projects, Al, A2, and A3. Each project has the same service life, and the present worth of each component value (B, I,

Consider three investment projects, Al, A2, and A3. Each project has the same service life, and the present worth of each component value (B, I, and C") is computed at 10% as follows:
TABLE P16.8

(a) If all three projects are independent, which projects would be selected based on BC(i)?
(b) If the three projects are mutually exclusive, which project would be the best alternative? Show the sequence of calculations that would be required to produce the correct results. Use the B/C ratio on incremental investment.

Projects Al A2 $20,000 35,000 8.000 $14.000 21,000 1000 $6,000 $5,000 12.000 4.000 PW) 3.000 $7,000 C"

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