Question
Consider two mutually exclusive projects inthe table below. Salvage Values represent the nert proceeds (after tax) from the diposal of the assets if they are
Consider two mutually exclusive projects inthe table below. Salvage Values represent the nert proceeds (after tax) from the diposal of the assets if they are sold at the end of each year. Both Projects B1 and B2 will be available (or can be repeated) with the same costs and salvage values for an indefinite period.
a) Assuming an infinite planning horizon, which project is better choice at MARR=12%(Use 15 years as the common analysis period.
The present worth for project B1 is $_____thousand.
The prestent worth for project B2 is $______thousand.
Which project is the better choice B1 or B2?
b) With a 10 year palnning horizon, which project is a better choice at MARR=12%.
The present worth for project B1 is $_____thousand.
The present worth for project B2 is $_____ thousand.
Which project is the better choice B1 or B2?
B1 | B2 | |||
n | Cash Flow | Salvage Value | Cash Flow | Salvage Value |
0 | ($30,000) | - | ($21,000) | - |
1 | -2,400 | 15,000 | -1,800 | 7,000 |
2 | -2,400 | 13,000 | -1,800 | 5,000 |
3 | -2,400 | 10,000 | -1,800 | 2,500 |
4 | -2,400 | 9,000 | - | - |
5 | -2,400 | 8,500 | - | - |
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