ABC$9,000$12,000$1,800Initial cost$15,000$8,000$5,0002 yearsAnnual benefitSalvage valueLife in years$2,000$9,0003 Years InfinityMARR10%i. The NPW of alt. A isA) $13,420B) $17,380C) $11,000D) $6,00ii. The NPW of alt. B isA) $13,420B) $17,380C) $11,000D) $6,000iii. The NPW of alt. C isA) $13,420B) $17,380C) $11,000D) $6,000iv. The best alternative among the three alternatives using the PW analysis isA) Alt. AB) Alt. BC) Alt. CD) Either alt. B or alt.

Answered: A B C $9,000 $12,000 $1,800 Initial…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A
B
C
$9,000
$12,000
$1,800
Initial cost
$15,000
$8,000
$5,000
2 years
Annual benefit
Salvage value
Life in years
$2,000
$9,000
3 Years Infinity
MARR
10%
i. The NPW of alt. A is
A) $13,420
B) $17,380
C) $11,000
D) $6,00
ii. The NPW of alt. B is
A) $13,420
B) $17,380
C) $11,000
D) $6,000
iii. The NPW of alt. C is
A) $13,420
B) $17,380
C) $11,000
D) $6,000
iv. The best alternative among the three alternatives using the PW analysis is
A) Alt. A
B) Alt. B
C) Alt. C
D) Either alt. B or alt.

Expert Solution

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The concept of present value states that an amount of money today is worth more than the same amount in the future.To put it another way, money received in the future is less valuable than money received today.The present value of an investment takes into account any interest rate that it may earn. The sum of future investment returns discounted at a specified level of rate of return expectation yields the present value , which is calculated as the sum of future investment returns are discounted at a predetermined rate of return expectation.

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