Given the following data, use present worth analysis to find the best alternative, A$,$ B$,$ or C$.$ Use $15\%$ interest.

A

B

C

Initial cost

$$10,000$

$$15,000$

$$12,000$

Annual benefit

$6,000$

$10,000$

$5,000$

Salvage value

$1,000$

$-2,000$

$3,000$

Useful life

$2$ years

$3$ years

$4$ years

Question $1$Answer

a$.$

NPW A: $$1702$; NPW B: $$15,473$; NPW C: $$7576.$ Recommendation: Alternative B

b$.$

NPW A: $$1702$; NPW B: $$21,717$; NPW C: $$7576.$ Recommendation: Alternative B

c$.$

NPW A: $-$$$3341$; NPW B: $$21,717$; NPW C: $$1063.$ Recommendation: Alternative B

d$.$

NPW A: $$3767$; NPW B: $$34,253$; NPW C: $$16,771.$ Recommendation: Alternative B