8-6. Annual expenses for two alternatives have been estimated on different bases as follows: Alternative A Alternative

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8-6. Annual expenses for two alternatives have been estimated on different bases as follows: Alternative A Alternative B Annual Expenses Annual Expenses End of Estimated in Estimated in Real Year Actual Dollars Dollars with b = 0 1 $120,000 $100,000 2 132,000 110,000 3 148,000 120,000 4 160,000 130,000 If the average general price inflation rate is expected to be 4% per year and the real rate of interest is 8% per year, show which alternative has the least negative equivalent worth in the base period? (8.2)

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Engineering Economy

ISBN: 9780134870069

17th Edition

Authors: William Sullivan, Elin Wicks, C Koelling

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