contestada

Two mutually exclusive alternatives are being considered. Both have lives of 10 years. Alternative A has a first cost of $10,000 and annual7-65 benefits of $4500. Alternative B costs $25,000 and has annual benefits of $8800. If the minimum attractive rate of return is 6%, which alternative should be selected

Respuesta :

jepessoa

Answer:

Alternative B should be selected since its NPV is higher

Explanation:

year         cash flow alternative A     cash flow alternative B

0                      -10000                    -25000

1                    4500                    8800

2                    4500                    8800

3                    4500                    8800

4                    4500                    8800

5                    4500                    8800

6                    4500                    8800

7                    4500                    8800

8                    4500                    8800

9                    4500                    8800

10                    4500                    8800

 

 

discount rate             6%                    6%

 

NPV                23120                       39769

Otras preguntas