Evaluate these mutually exclusive alternatives with a horizon of 20 years and a MARR of 15% Use the conventional B/C ratio by PW analysis method. Note: (Do nothing) is not an option. A B Initial Investment $9,500 $18,500 Annual Savings $3,200 $5,000 Annual Costs Salvage Value $1,000 $2,750 $600 $4,200 Conventional B-C ratio with PW: B-C= = PW(benefits of the proposed project) PW(total costs of the proposed project) PW(B) I-PW(MV) + PW(O&M) A B C 1 A B 2 Initial Invest $9,500 $18,500 3 Ann. Savings $3,200 $5,000 4 Ann. Costs $1,000 $2,750 5 Salvage Val $6,000 $4,200 6 PW of Ben. $20,030 $31,297 7 PW of Costs $15,393 $35,457 a BIC 1.30 0.88
Evaluate these mutually exclusive alternatives with a horizon of 20 years and a MARR of 15% Use the conventional B/C ratio by PW analysis method. Note: (Do nothing) is not an option. A B Initial Investment $9,500 $18,500 Annual Savings $3,200 $5,000 Annual Costs Salvage Value $1,000 $2,750 $600 $4,200 Conventional B-C ratio with PW: B-C= = PW(benefits of the proposed project) PW(total costs of the proposed project) PW(B) I-PW(MV) + PW(O&M) A B C 1 A B 2 Initial Invest $9,500 $18,500 3 Ann. Savings $3,200 $5,000 4 Ann. Costs $1,000 $2,750 5 Salvage Val $6,000 $4,200 6 PW of Ben. $20,030 $31,297 7 PW of Costs $15,393 $35,457 a BIC 1.30 0.88
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 13P
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