Use an 8-year analysis period and a 10% interest rate to determine which alternative should be selected:

Question:

Use an 8-year analysis period and a 10% interest rate to determine which alternative should be selected:

                                                    A                  B

First cost                               $5300        $10,700

Uniform annual benefit     $1800          $2,100

Useful life, in years                     4                    8

Two alternative courses of action have the following schedules of disbursements:

Year                             A                     B

1                                   0                  -$100

2                                   0                    -200

3                                   0                    -300

4                                   0                    -400

5                                   0                    -500

                            -$1300                 -1500

Based on a 6% interest rate, which alternative should be selected?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: