i=9

P2 (12 marks). (a) Using benefit-cost ratio method, determine which one of the three mutually exclusive alternatives A, B and C should be selected. Each alternative has a 6-year useful life. Assume i % interest rate. i % is given for everyone in the table shown. AJD BJD CJD Initial cost 560 340 120 Uniform annual benefit 140 100 40 Salvage Value 40 0 0 (b) Which option should be preferred on the basis of incremental net benefit-cost ratio? Hint: Check for A-B and B-C as incremental procedures. (c) If the results obtained with the two methods do not match, use net present values to decide