Three assets are being considered. Assets A, B, and C have natural lives of 4, 5, and
Question:
Three assets are being considered. Assets A, B, and C have natural lives of 4, 5, and 6 years and first costs of \(\$ 12,000, \$ 20,000\), and \(\$ 30,000\), respectively. There will be no salvage value at the end of each asset's life. Market value decreases in a straight-line manner for each. Identical assets will be used to succeed themselves if the planning horizon exceeds their natural life. The assets are needed for a strategic venture that is expected to last 7 years.
a. What is the most appropriate planning horizon for evaluation of these assets?
b. What is the salvage value of each alternative at the end of the planning horizon determined in (a)?
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt