Question: Use the present worth analysis method to determine which alternative (A or B) one should choose. Assume that the interest i = 8% per year.

Use the present worth analysis method to determine which alternative (A or B) one should choose. Assume that the interest i = 8% per year.

A B First cost $5,500 $11,000 Annual benefit $1,850 $2,100 Salvage value $500 $1,000 Useful life, in years 4 8

(a) Compute the net present worth of alternative A.

(b) Compute the net present worth of alternative B.

(c) Which is the best option?

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