A medical mobility equipment manufacturer is considering two alternatives as par

Question

A medical mobility equipment manufacturer is considering two alternatives as part of an upgrade of its power wheelchairs assembly. Alternative A has an installed cost of $10,000, net annual revenue of $6,000 and a useful life of 3 years. Alternative B has an installed cost of $20,000, a net annual revenue of $6350. and a useful life 6 years. At the end of year 3, alternative A would be replaced with another alternative A having the same installed cost and net annual revenues. If the MARR is 8% per year, which alternative (if any) should be selected based on the present worth method? Assume negligible savage value.

Explanation / Answer

alternative B should be selected as it has much more NPV than A. answer please rate appreciated

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