Question: Alternative A and B are being evaluated. The effective annual interest rate is 10%. Alternative A Alternative B First cost $80,000 $35,000 Life 20 years
Alternative A and B are being evaluated. The effective annual interest rate is 10%. Alternative A Alternative B First cost $80,000 $35,000 Life 20 years 10 years Salvage value $7,000 $0 Annual cost (Years 1-5) $1,000 $3,000 Annual cost (Years 6-10) $1,500 $4,000 Annual cost (Years 11-20) $2,000 $0 Additional cost (Year 10) $5,000 $0 Draw cash flow diagrams for each alternative b) The present worth for alternative A? g) The future worth for alternative B
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