Question
Consider these two alternatives: Alternative 1 Alternative 2 Capital investment $5,000 $6,000 Annual revenues $1,420 $1,900 Annual expenses $250 $550 Estimated MV $900 $1200 Useful
Consider these two alternatives:
| Alternative 1 | Alternative 2 | |
| Capital investment | $5,000 | $6,000 |
| Annual revenues | $1,420 | $1,900 |
| Annual expenses | $250 | $550 |
| Estimated MV | $900 | $1200 |
| Useful life | 7 years | 9 years |
If the capital investment of Alternative 1 is known with certainty, by how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? MARR = 15% per year
a.$6,897
b.$6,547
c.$5,791
d.$5,991
e.$6,054
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Cost-Benefit Analysis
Authors: Euston Quah, E.J. Mishan
5th Edition
0415350379, 9780415350372
