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Q3. Alternative X and Alternative Y are mutually exclusive alternatives (MEA). Below is the information of the two alternatives. The MARR is 8%. Alternative X
Q3. Alternative X and Alternative Y are mutually exclusive alternatives (MEA). Below is the information of the two alternatives. The MARR is 8%. Alternative X Alternative Y Capital $5,000 $6,000 Investment Useful life 20 15 Annual Expenses $200 $800 in year 10 and decreasing by a constant amount of $50 per year thereafter Salvage Value (a) What is the annual worth (AW) of alternative X? Show all the steps of calculation. (4 marks) (b) What is the annual worth (AW) of alternative Y? Show all the steps of calculation. (5 marks) (0) Based on your answers in part (a) and (b), explain which alternative should be selected. (2 marks)
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