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PWA = PWB = 1 2. Project C costs X to begin and costs Y every year to operate with a salvage value of Z at the end of Year 5.

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Answer #1

AW of C = -400 * (A/P, 12%,5) - 50 + 120 * (A/F, 12%,5)

= -400 * 0.277410 - 50 + 120 * 0.157410

= -142.07

AW of D = -900 * (A/P, 12%,infinite) - 50 + 400 * (A/F, 12%,inifinite)

= -900 * 0.12 - 50 + 400 * 0

= -158

As annual cost of C is less, it should be selected

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