There are two projects expected to be in use for 12 years and must select...
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Accounting
There are two projects expected to be in use for 12 years and must select which is a better option. Project A is anticipated to last 12 years, but is expensive and require maintenance. Project B is cheaper and require little maintenance, but must be replaced every 4 years. The salvage value of each is roughly equal to the cost of removal. Estimate the present worth of the alternatives at 3% annual interest and recommend the best option for the 12-year life. Show your work in Excel.
Projects
A
B
Initial cost
$160000
$40,000
Annual O&M cost
$4320
$540
Salvage value
$0
$0
Life (years)
12
4
Answer & Explanation
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