Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 2 10 pts Find the capitalized cost for the following cash flows occurring over an infinite number of periods, where A, B and C
Question 2 10 pts Find the capitalized cost for the following cash flows occurring over an infinite number of periods, where A, B and C are defined as below. C A A B B 1 2 3 4 Repeating 5 6 forever P A = $100 B = $50 C = $150 Assume the interest rate is 14%. O $97.96 O $699.75 O $622.10Use Present Worth Analysis to determine whether Alternative A or B should be chosen. Items are identically replaced at the end of their useful lives. Assume an interest rate of 12% per year, compounded annually. Alternative A Alternative B (in) Alternative A, because it costs $349.30 less than Alternative B, in terms of present worth 0 Alternative B, because it costs $349.30 more than Alternative A, in terms of present worth 0 Alternative A, because its present worth is positive 0 Alternative B, because it only incurs the initial cost once every three years instead of every two years The following data is available for three different alternatives. Assume an interest rate of 7% per year, compounded annually. Alternative A Alternative B Alternative C Initial Cost 5,000 6,600 10,000 Annual Benefit 825 1,707 4,393 Useful Life (yrs) infinite 20 10 Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative. O Choose Alternative A because it lasts the longest O Choose Alternative A because its net present worth is postive O Choose Alternative C because its net present worth is $26,943.59 more than its nearest competitor Choose Alterntive C because it has the highest annual benefit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started