New Products Ajax Company is preparing to diversify by expanding its product lin

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New Products


Ajax Company is preparing to diversify by expanding its product line. Two mutually exclusive products are available. The details of the net projected cash flow for both alternatives are presented below. MARR for Ajax is 15%.
Year Alt A Alt B
0 $ -10,000 $ -10,000
1 2,000 $4,000
2 2,500 3,500
3 3,000 3,000
4 3,500 2,500
5 4,000 2,000
6 4,500 1,500
1. The net present worth of Alternative A is:
(Express your answer to 3 significant digits, XXX0. or XXX. or XX.X or -XXX0. or -XXX. or -XX.X)




2. The net equivalent annual benefit of alternative B is:
(Express your answer to 3 significant digits, XXX0. or XXX. or XX.X or -XXX0. or -XXX. or -XX.X)



The Ajax Company should take the following action: (Points : 5)
Do Nothing
Select Alternative A
Select Alternative B
Select Alternative C

Explanation / Answer

1) NPW of Alternate A = 153 2) equivalent benefit of system B = 116 3) better option is alternate A, select A

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