ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The following data is available for three different alternatives.
Assume an interest rate of 10% per year, compounded annually.
Initial Cost
Annual Benefit
Useful Life (yrs)
Alternative A
10,000
1,450
infinite
OO
Alternative B
11,000
1,930
10
Alternatives B and C are replaced at the end of their useful lives with identical replacements.
Using present worth analysis, find the best alternative.
Choose Alternative A because its net present worth is postive
Choose Alternative A because it lasts the longest
Alternative
20,000
6,707
5
Choose Alternative C because its net present worth is $9,807.17 more than its nearest competitor
Choose Alterntive C because it has the highest annual benefit
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Transcribed Image Text:The following data is available for three different alternatives. Assume an interest rate of 10% per year, compounded annually. Initial Cost Annual Benefit Useful Life (yrs) Alternative A 10,000 1,450 infinite OO Alternative B 11,000 1,930 10 Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative. Choose Alternative A because its net present worth is postive Choose Alternative A because it lasts the longest Alternative 20,000 6,707 5 Choose Alternative C because its net present worth is $9,807.17 more than its nearest competitor Choose Alterntive C because it has the highest annual benefit
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