Question: A company is considering two projects and must do one of them. Project A requires an investment of $37,000. Estimated annual receipts for 5 years

A company is considering two projects and must do one of them. Project A requires an investment of $37,000. Estimated annual receipts for 5 years are $13,500; estimated annual costs are $4,000. Alternatively, Project B requires an investment of $68,000, has annual receipts for 5 years of $18,500, and has annual costs of $4,500. Assume both projects have a $11,000 salvage value and that MARR is 14% /year. 1. What is the annual worth of Project A ? 2. What is the annual worth of Project B ? 3. Which project should be recommended? Why
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
