Use present worth analysis to determine which alternative should be taken. 1=8% First Cost O&M Costs Alt 2 $20,000 $700/C Alt 1 $18,000 $450, increasing $25/yo 5 yrs $4,000 $5,000/ 1 5 yrs Useful Life Salvage Value Annual Revenue $5,000 $5,500/yI Draw out a cash flow diagram (example of a random cash flow diagram below) $36,000 EOY 1 2 3 wt 1 + + $19,500 $122,000 $175,000