Present worth of Delta-T is computed as follows:
= - $ 13,000 + $ 4,750 / 1.181 + $ 4,750 / 1.182 + $ 4,750 / 1.183 + $ 4,750 / 1.184 + $ 4,750 / 1.185 + $ 4,750 / 1.186 + $ 4,750 / 1.187 + $ 4,750 / 1.188
= $ 6,368.44 Approximately
Present worth of Alpha-B is computed as follows:
= - $ 15,000 + $ 6,250 / 1.181 + $ 6,250 / 1.182 + $ 6,250 / 1.183 + $ 6,250 / 1.184 + $ 6,250 / 1.185 + $ 6,250 / 1.186 + $ 6,250 / 1.187 + $ 6,250 / 1.188
= $ 10,484.79 Approximately
Since the present worth of Alpha-B is greater than the present worth of Delta-T, hence Alpha-B shall be selected.
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