Question: Problem 1 (20 points) Compare the following options based on annual cash flows and using an interest rate of 12% compounded monthly answering the following

Problem 1 (20 points) Compare the following options based on annual cash flows and using an interest rate of 12% compounded monthly answering the following questions: FOS PRAE Initial cost Monthly O&M costs Salvage value Useful life (years) Option 1 $80,000 1,800 1,000 10 a. Draw the required cash flow diagrams. (4 pts) b. What is the decision criterion? (2 pts) c. Choose the best project. (10 pts) i. Present the necessary equivalent models (4 pts) XBM Option 2 $70,000 2,200 feldo19 BURG8 B 8 (elbook) vioedT

Problem 1 (20 points) Compare the following options based on annual cash flows and using an interest rate of 12% compounded monthly answering the following questions: a. Draw the required cash flow diagrams. (4 pts) b. What is the decision criterion? (2 pts) c. Choose the best project. (10 pts) i. Present the necessary equivalent models (4 pts)

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