To select the best investment we will use annual worth method.
AW = - Initial investment (A/P,I,n) + receipts - expenses
n = 10 years
I = 10% = 0.1
(A/P,I,n) = I (1+I)n / ((1+I)n - 1)
(A/P,10%,10) = 0.1(1+0.1)10/( (1+0.1)10-1) = 0.163
Design | investment | (A/P,10%,10) | (-)investment X (A/P,10%,10) | (-)Annual expenses | Annual receipt | AW | |
A | 170000 | 0.163 | 27710 | 70000 | 114000 | 16290 | |
B | 330000 | 0.163 | 53790 | 79000 | 147000 | 14120 | |
C | 300000 | 0.163 | 48900 | 64000 | 130000 | 17100 |
According to Annual worth method I will choose deign C
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