For the cash flows shown, use an annual worth comparison and an interest rate of 10% per year. (a) Determine the alternative that is economically best.
(b) Determine the first cost required for each of the two alternatives not selected in ( a ) so that all alternatives are equally acceptable. Use a spreadsheet to answer this question.
|
|
X
|
Y
|
Z
|
|
First cost, $
|
90,000
|
400,000
|
650,000
|
|
Annual cost,
|
40,000
|
20,000
|
13,000
|
|
$ per year
|
|
|
|
|
Overhaul every
|
-
|
-
|
80,000
|
|
10 years, $
|
|
|
|
|
Salvage value, $
|
7,000
|
25,000
|
200,000
|
|
Life, years
|
3
|
10
|
|