Consider A-E, five mutually exclusive alternatives: A B C D E Initial cost $600 $600 $600 $600

Question:

Consider A-E, five mutually exclusive alternatives:

A B C D E

Initial cost $600 $600 $600 $600 $600

Uniform annual 100 100 100 150 150

Benefits for first

5 years

5 years 50 100 110 0 50

The interest rate is 10%. If all the alternatives have a 10-year useful life, and no salvage value, which Alternative should be selected?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...