Question

I ARABIA المال العرب بیت السعودية وزارة التعليم العالي جامعة طيبة For the following Mutually Exclusive alternativ ased upon a present worth analysis?i= 10% ternative and state the reason to support your analysis? (20 points) Exclusive alternatives, which alternative should be selected First cost, $ Annual operating cost (AOC), $/year Salvage value, $ Life, years Electric-Powered -2,500 -900 200 Gas-Powered -3,500 -700 350 5 - Solar Powered 6,000 0 100 اه ا | 7 3 4 ل 750- = A وہ 35۔ " .60 A وی (5 10 رA (5 روز ۱۰ (در هر P / A ، 20 = م )355 + اگر رها , اربارا )) aه ۲۱ (در (۰) رP / A)ه 5 - )

Answer 1

Answer
Statement Showing the Present Value Analysis
	Present Value Factor @10% (a)	Electric-Powdered (Amount $) (b)	Present Value (Amount $) (a*b)	Gas-Powdered (Amount $) (c)	Present Value (Amount $) (a*c)	Solar- Powdered (Amount $) (d)	Present Value (Amount $) (a*d)
First Cost (Y-0)	1	-2500	-2500	-3500	-3500	-6000	-6000
Year-1	0.909	-900	-818.1	-700	-636.3	-50	-45.45
Year-2	0.826	-900	-743.4	-700	-578.2	-50	-41.3
Year-3	0.751	-900	-675.9	-700	-525.7	-50	-37.55
Year-4	0.683	-900	-614.7	-700	-478.1	-50	-34.15
Year-5	0.621	-900	-558.9	-700	-434.7	-50	-31.05
Year-5	0.621	200	124.2	350	217.35	100	62.1
		Total (Amount $)	-5786.8	Total (Amount $)	-5935.65	Total (Amount $)	-6127.4

Present Worth Analysis showing that the Electric-Powdered alternative is best among other alternatives, since it is showing minimum cost of $ 5786.8 (Outflow). Gas-Powdered showing present worth cost of $5935.65 , whereas Solar-Powdered showing present worth cost of $ 6127.4.

[Note : In Present Worth Analysis we take present worth of all the cash-flows at a particular point of time and compare it with the other options.]