Answered step by step
Verified Expert Solution
Question
1 Approved Answer
show work plz A and B Two alternatives have been proposed for a government project. The estimated costs associated with each alternative are given below.
show work plz A and B
Two alternatives have been proposed for a government project. The estimated costs associated with each alternative are given below. It can be shown that both Alternative I and Alternative II have modified B-C ratios greater than one, meaning that either can be considered as an acceptable alternative. Use the modified B-C ratio method, with AW as the equivalent-worth measure, to determine which alternative should be selected at an interest rate of 3% per year. Hint: Perform an incremental analysis; do not be tempted to incorrectly choose the alternative with the higher modified B-C ratio. Alternative Alternative I Alternative II Installed cost, $ $1,250,000 $1,050,000 Annual maintenance, S per year $180,000 $125,000 Annual benefits, $ per year $550,000 $540,000 Salvage value, $ $11,000 $9,800 Project life, years 28 28 (a) With AW as the equivalent-worth measure, what is the modified AB/AC ratio for (Alternative I - Alternative II)? (b) With AW as the equivalent-worth measure, which alternative should be selected, based on the modified B/C ratio method of analysisStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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