Financial data related to three different alternatives are provided in the table

Question

Financial data related to three different alternatives are provided in the table below. Assume that useful lives are all 10 years. Annual interest rate-8% ata nitial Cost Annual additional cost $100 Uniform Annual Benefits $650 1,000 $2500 25 5.000 150 500 12, The EUAC of alternative “P” is A) $400 B) $450 $845 D) $650 5600 i 3. The EUABofa?ternative “O" is-- A) $2 $100 C $350 D) 300 ZuG 14. The EUAC of alternative "R" is $626.25 C) $12 pr D) $234.50 15. EUAW of alternative"P 16. EUAW of alternative "Q” 17, EUAW ofa!ternative "R" 5oO ?2 :50/ 523.5?. ?? 18. Which alternative is the best choice? Page 3

Explanation / Answer

The formula for EUAC is Annual Maintenance +(Initial Cost*Interest Rate)/(1 - (1+interest Rate)^-no.of years) Project P Q R Imnitial Cost A 5000 1000 2500 Annual Cost M 100 25 150 Uniform A Benefit R 650 200 500 No. of years n 10 10 10 Salvage Value S 0 0 0 EUAB 650 200 500 EUAC 845.1474 174.0295 522.5737 EUAW Cost wise 195.1474 -25.9705 22.57372 Answers to the question EUAC of P 845 EUAB of Q 200 EUAC of R 522 EUAW of P -195 EUAW of Q 26 EUAW of R -22 Best Choice(least Cost) The Project Q

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