Question

AB 22 000 26200 Investment salvage Value 4000 5000 Annual revenue 7000 9500 3 years u seful life į % 4 years 15% 15% * wich project would you recommend (select), AAB? a) use AW method b) use pW repeatability c) use FW co termuintet

Answer 1

Cash flows Present value Future Worth PVIF @ 15% FVIF @ 15% Year A в A в A В O $(22,000) $ (26,200) 1 $ 7,000 $ 9,500 2 7,000 $ 9,500 3 7,000 $ 14,500 4 11,000 $ 1.000 -$22,000.00 1.749-$38,478.14 $10,646.13 $9,257.50 $8,050.00 $11,000.00 -$26,200.00 -$45,823.96 $14,448.31 $12,563.75 $16,675.00 $6,086.96 $5,293.01 $4,602.61 $8,260.87 $7,183.36 $9,533.99 0.870 1.521 0.756 1.323 0.658 1.150 $6,289.29 $0.00 $0.00 0.572 1.000 $271.86 -$1,221.78 Present Worth (PW) 2.283 Future Worth $475.49 -$2,136.90 PVIFA @ 15% 2.855 Annual Worth (AW) $95.22-$535.11 Machine A should be selected

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