Business

Oliver Barker

2 October, 06:46

The following data is available for three different alternatives. Assume an interest rate of 9% per year, compounded annually.

Alternative A Alternative B Alternative C

Initial Cost 7,000 8,600 14,000

Annual Benefit 1,375 793 6,007

Useful Life (yrs) infinite 18 9

Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative.

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