Determine the alternative that is economically best

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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


Reference no: EM13881657

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