Consider the following EOY cash flows for two mutually exclusive alternatives. (one must be chosen)...
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Finance
Consider the following EOY cash flows for two mutually exclusive alternatives. (one must be chosen)
Alternative A
Alternative B
Capital investment (TL)
4000
12000
Annual expenses (TL)
2800
2300
Useful life (years)
3
6
Market value at the end of
2900
2900
Useful life (TL)
The MARR is 8% per year.
a) Determine which alternative should be selected if the repeatability assumption applies. Use PW in your analysis.
PW (A) =?
PW (B) =?
Which one is preferred?
b) Determine which alternative should be selected if the analysis period is 6 years and the repeatability assumption does not apply. Use the AW method.
AW (A) =?
AW (B) =?
Which one is preferred?
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