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An engineer is choosing between three different alternatives for a machine component he needs to complete his biorefinery. He summarized the pertinent information about these
An engineer is choosing between three different alternatives for a machine component he needs to complete his biorefinery. He summarized the pertinent information about these alternatives in the tables below. Assume a study period of 8 years
Alternative | Investment Cost | Salvage Value | Useful Life | Depreciation Method |
A | 100000 | 25000 | 8 | Sum of the Years |
B | 70000 | 20000 | 4 | Straight Line |
C | 76000 | 5000 | 6 | Declining Balance |
The table below shows the projected net cash flows for each of the alternatives.
EOY | Alternative A | Alternative B | Alternative C |
1 | 30000 | -20000 | 30000 |
2 | 40000 | 40000 | 30000 |
3 | 50000 | 50000 | 30000 |
4 | 60000 | 8000 | 30000 |
5 | 70000 | - | 30000 |
6 | 80000 | - | 30000 |
7 | 90000 | - | - |
8 | 100000 | - | - |
Find the Future Worth of Alternative B (MARR of 12.5%), and the Annual Worth of A, B, and C (MARR of 8%).
Answers should be:
FW:
B = -14903.22
AW:
B = 1825.86
the answer is verified by our professor :(
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