Question
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?
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Fundamental Accounting Principles
Authors: Kermit D. Larson, John J Wild, Barbara Chiappetta
17th Edition
0072946601, 9780072946604
