Annual worth of alternative A = -100,000(A/P, 10%, ∞) + 16,000
= -100,000 (0.10) + 16,000
= -10,000 + 16,000
= $6,000
Annual worth of alternative B = -150,000(A/P, 10%, 20) + 24,000
= -150,000 (0.1175) + 24,000
= -17,625 + 24,000
= $6,375
Since Annual worth of alternative B is more than alternative A, therefore, alternative B should be selected.
2. Consider the following two mutually exclusive alternatives: Cost, $ Uniform annual benefit, $ Useful life,...
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