using benefitcost ratio analysis determine which one of the

using benefit-cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. each alternative has a 6-year useful life. Assume a 15% MARR.

Solution

Alternative A:
NPW = 1,800(P/A, 10%, 8) - 5,300 - 5,300(P/F, 10%, 4)
= $683.10
Alternative B:
NPW = 2,100(P/A, 10%, 8) - 10,700
= $503.50
Select alternative A