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A company is considering two projects and must do one of them. Project A requires an investment of $37,000. Estimated annual receipts for 5 years
A company is considering two projects and must do one of them. Project A requires an investment of $37,000. Estimated annual receipts for 5 years are $13,500; estimated annual costs are $4,000. Alternatively, Project B requires an investment of $68,000, has annual receipts for 5 years of $18,500, and has annual costs of $4,500. Assume both projects have a $11,000 salvage value and that MARR is 14% /year. 1. What is the annual worth of Project A ? 2. What is the annual worth of Project B ? 3. Which project should be recommended? Why
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