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Using the information given, which alternative should I choose? Use a Present worth analysis with i = 7% A B First Cost $57,000 $86,000 Annual
Using the information given, which alternative should I choose? Use a Present worth analysis with i = 7%
| A | B |
First Cost | $57,000 | $86,000 |
Annual benefits | $8,900 | $10,700 |
Annual O&M | $1,500 | $1,650 |
Salvage value | $10,000 | $14,000 |
Useful, life | 6 | 12 |
Question:
- Draw a cash flow diagrams for the two alternatives.
- You must create two tables in excel to represent the two alternatives per year:
- find a total by year
- find the Present worth of each alternative (first cost + npv (rate,all the totals per year))
- Draw a diagram of each alternative per year based on the first cost, annual benefits, operating and maintenance, salvage value.
- Based on the diagram that you created, you can start by making and report a decision of each alternative. Explain!
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