Question: Data for two mutually exclusive alternatives are given below. Alternative A Alternative B Initial Cost $4,000 $3,000 Annual Benefits (beginning at the end of year

Data for two mutually exclusive alternatives are given below.

Alternative A Alternative B
Initial Cost $4,000 $3,000
Annual Benefits (beginning at the end of year 1) $1,000 $600
Annual Costs (beginning at the end of year 1) $300 $100
Salvage Value $500 $0
Useful Life (years) 5 10

Compute the net present worth for each alternative and choose the better alternative. MARR = 6%

A. None can be chosen

B. Alternative A

C. Alternative B

D. Any alternative can be chosen

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