For the cash flows shown, use an annual worth comparison and an interest rate of
ID: 2427688 • Letter: F
Question
For the cash flows shown, use an annual worth comparison and an interest rate of 10% per year.
Determine the first cost required for each of the two alternatives not selected in (a) so that all alternatives are equally acceptable.
X Y Z
First Cost, $ -90,000 -400,000 -650,000
Annual Cost, $/yr -40,000 -20,000 -13,000
Overhaul $ ever 10 yrs, --------- ---------- -80,000
Salvage Value, $ 7,000 25,000 200,000
Life, years 3 10 Infinity
Explanation / Answer
calculation of present annuval outflow
prexent salvage value 5,259 9,639
net present value of outflow (184,221) (513,261)
net present value of year outflow (61,407,) (51,326)
so in two alternatives second alternative is low cost of net present value of outflow in year.
and question is not qluarity what is requirements of question is not undestandble
particulars x alternative y alternative first cost (90,000) (400,000) annuval cost (40,000) (20,000) useful life 3 years 10 years net present annuval cost @ 10%anniuty factors (40,000)*2.487=(99,480) (20,000)*6.145=(122,900) total outflow (189,480) (522,900)