Question: An engineer is choosing between three different alternatives for a machine component he needs to complete his biorefinery. He summarized the pertinent information about these

An engineer is choosing between three different alternatives for a machine component he needs to complete his biorefinery. He summarized the pertinent information about these alternatives in the tables below. Assume a study period of 8 years

Alternative Investment Cost Salvage Value Useful Life Depreciation Method
A 100000 25000 8 Sum of the Years
B 70000 20000 4 Straight Line
C 76000 5000 6 Declining Balance

The table below shows the projected net cash flows for each of the alternatives.

EOY Alternative A Alternative B Alternative C
1 30000 -20000 30000
2 40000 40000 30000
3 50000 50000 30000
4 60000 8000 30000
5 70000 - 30000
6 80000 - 30000
7 90000 - -
8 100000 - -

Find the Future Worth of Alternative B (MARR of 12.5%), and the Annual Worth of A, B, and C (MARR of 8%).

Answers should be:

FW:

B = -14903.22

AW:

B = 1825.86

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