Calculate the following for each alternative

A) the payback periods

B) the total equivalent investment cost at the end of the construction periods

C) the total equivalent uniform annual worth of the project (use the operation period of each alternative)

Which operation should be chosen?

A large project requires an investment of $200 million. The construction will take three years: $30 million will be spent during the first year, $100 million during the second year, and $70 million during the third year of construc- tion. Two project operation periods are being considered: 10 years with the expected net profit of $40 million a year and 20 years with the expected net profit of $32.5 million a year. For simplicity of calculations it is assumed that all cash flows occur at the end of the year. The company's minimum required return on investment is 10%. Calculate the following for each alternative (a) The payback periods (b) The total equivalent investment cost at the end of the construction period (c) The equivalent uniform annual worth of the project (use the operation period of each alternative Which operation should be chosen