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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:

  1. Draw a cash flow diagrams for the two alternatives.
  2. You must create two tables in excel to represent the two alternatives per year:
    1. find a total by year
    2. find the Present worth of each alternative (first cost + npv (rate,all the totals per year))
  3. Draw a diagram of each alternative per year based on the first cost, annual benefits, operating and maintenance, salvage value.
  4. Based on the diagram that you created, you can start by making and report a decision of each alternative. Explain!

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