Consider the net cash flows and salvage values shown below. Assume the alternatives can be indefinitely renewed with the same cash flows and salvage values. Using a MARR of 8%, specify the planning horizon and complete set of cash flows for each alternative using each of the following:

a. What is the planning horizon for these alternatives if a least common multiple approach is used to determine the planning horizon?

b. Assume the NCFs of all alternatives are expected to repeat indefinitely as shown. If a least common multiple of lives approach is to be used, specify the complete set of cash flows for each alternative and the annual worth for each alternative using a MARR of 8%.

c. Repeat Part b by determining the annual worth of each alternative based on its ‘‘natural’’ life (i.e., 4 years for Alt. 1 and 3 years for Alt. 2).

Alternative 1 Alternative 2 EOY NCF SV NCF SV 0 -$100 $100 -$70 $70 1 $20 $40 $30 $50 2 $20 $20 $40 $30 3 $40 $50 4 $60