Use 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 3% per year, compounded annually.

Use 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 3% per year, compounded annually. Initial Cost Annual Benefit Salvage Value Useful Life (yrs) Alternative A 360 60 102 2 Alternative B 1,000 162 182 3 Alternative A, because its present worth is positive Alternative A, because it costs $296.26 less than Alternative B, in terms of present worth Alternative B, because it costs $296.26 more than Alternative A, in terms of present worth Alternative B, because it only incurs the initial cost once every three years instead of every two years