Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You have identified three alternatives for a small project at your plant. The interest rate is 4.8808848 % per semiannual. Alternative F G H Initial
You have identified three alternatives for a small project at your plant. The interest rate is 4.8808848 % per semiannual.
| Alternative | F | G | H |
| Initial Cost, $ | 180,000 | 100,000 | 120,000 |
| Salvage Value, $ | 80,000 | 12,000 | 18,000 |
| Annual Cost, $ | 16,000 | 12,000 | 10,000 |
| Annual Revenue, $ | 86,000 | 70,000 | 60,000 |
| Life, years | 4 | 3 |
a) What is the LCM of the life of three alternatives if alternative H has a project life of 11 years? Which alternative should be selected?
b) Which alternative should be selected if alternative H has an infinite life?
Step 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