A Commerical Fisherman needs to purchase a new boat. He is considering three alt

Question

A Commerical Fisherman needs to purchase a new boat. He is considering three alternatives A, B & C. Boat A costs $200,000. and is expected to produce net revenues of $50,000. per year. Boat B costs $290,000. and is expected to produce net revenues of $75,000. per year. Boat C costs $225,000. and is expected to produce revenues of $60,000. per year. Salvage value at the end of the five year life of each boat is estimated to be $25,000. The fisherman's minimum attractive rate of return is 6%. 1. The Net Present Worth of Boat A is: (Express your answer to 3 significant digits with trailing zeros as required: XXX00., or XXX0., or XXX. for positive present worths or -XXX00., -XXX0. or -XXX. for negative present worths) (Points : 5) 2. The Net Present Worth of Boat B is: (Express your answer to 3 significant digits with trailing zeros as required: XXX00., or XXX0., or XXX. for positive present worths or -XXX00., -XXX0. or -XXX. for negative present worths) (Points : 5) 3. The Net Present Worth of Boat A is: (Express your answer to 3 significant digits with trailing zeros as required: XXX00., or XXX0., or XXX. for positive present worths or -XXX00., -XXX0. or -XXX. for negative present worths) (Points : 5) 4. What should the Fisherman do? (Points : 5) Buy Boat A Buy Boat B Buy Boat C Do Nothing

Explanation / Answer

Boat B costs $290,000. and is expected to produce net revenues of $75,000. per year.

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