Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 :(

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Pricing And Hedging Financial Derivatives A Guide For Practitioners

Authors: Leonardo Marroni, Irene Perdomo

1st Edition

1119953715, 978-1119953715

More Books

Students also viewed these Finance questions