Three mutually exclusive projects, Project A Project B, and Project C, are being

Question

Three mutually exclusive projects, Project A Project B, and Project C, are being considered for investment at a MARR of 10%. The three investments are explained in the table below. Answer the questions that follow the table. Project A Project B Project C Initial Cost $50,000 $40,000 $45,000 Annual $3,500 O&M; $4,700 $2,800 Annual Revenues $5,300 $7,400 $8,200 Useful life 2 years 3 years 6 years What is the correct setup for calculating Annual Worth of Project A? How will you use this Annual Worth to calculate NPW for Project A? Use the different drop downs to complete the answers. Aw= [Select] I Select ] I Select ] I Select ] I Select ] 10%, NPW-AWSelect ] 10%, 3

Explanation / Answer

AW of machine A

Intial cost = 50000

O&M = 3500

Revenue = 5300

life = 2yrs

MARR = 10%

AW of A = -50000 (A/P,10%,2) -3500 + 5300

AW of A = -28810 + 1800

AW of A = -27010$

NPW of A = AW of A (F/P,10%,3)

NPW of A = 27010 (1+0.1)3 = 35950.31$

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