Question

Use the imputed market value technique to determine the better alternative below. The MARR is 12% per year and the study period is four years. Capital Investment, millions Annual Expenses, millions Useful Life, years Market Value (End of useful life) Alternative J 41 10 4 0 Alternative K 56 20 9 o Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. The present worth of Alternative J over four years is $ million. (Round to two decimal places.) The present worth of Alternative k over four years is $ million. (Round to two decimal places.) V should be selected.

Answer 1

Hi! Please check the attached picture for the solution.

Alternative J = $23.50 million

Alternative K = $30.51 million

Alternative J should be selected.

Thank you.

Answer:- Alternative I Penticulens Amount Capital Investment 41000000 Add Annual Expenses 30373493 Expenses & PUAR (MARRY, Year [10000000X PUAF (12% 4 year. [10000000X 3.0373493] 713 73493 은 Equilized Annual Cost [[AL] Total Pu of lost PUAF(1 21 4 Year 71373493 3.0373493 EAC - 23498 672 Answer : 23.50 million

Alternative k Penticulers Amount Capital Investment 56000 000 Add Annual Expenses 106564995 Expenses & PUAR (Y., year] (20000000 xpuat lazy gyear] [2,0000000 25.3282497] 1625 64996 Equilized Annual - Total Pv of cost Cost [EAC PUAR (11,9 Year) 762564996 5.3282417 EAC = 30540018 Answer = 30.51 million Alternative I EAC is lower Alternative I should be selected.