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2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative
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Answer #1

AW for A = - 30000 * (A/P, 20%,10) + 15000 * 3.50 - 15000 * 1 - 15000

= - 30000 * 0.238523 + 15000 * 3.50 - 15000 * 1 - 15000

= 15344.32

AW for B = - 60000 * (A/P, 20%,10) + 20000 * 4.40 - 20000 * 1.40 - 30000 + 20000 * (A/F, 20%,10)

= - 60000 * 0.238523 + 20000 * 4.40 - 20000 * 1.40 - 30000 + 20000 * 0.038523

= 16459.09

AW for C = - 50000 * (A/P, 20%,10) + 18000 * 4.10 - 18000 * 1.15 - 26000 + 15000 * (A/F, 20%,10)

= - 50000 * 0.238523 + 18000 * 4.10 - 18000 * 1.15 - 26000 + 15000 * 0.038523

= 15751.70

AW for B is highest, so it should be selected

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