6 There are three mutually exclusive schemes A B and C and t

6. There are three mutually exclusive schemes, A, B, and C, and the economic parameters are listed as follows. Set 1C-10%, please use the annual value method to compare the optimization of the scheme Annual income expenditure Annual Investment scheme (thousand Life (n)(thousand(thousand(thousand Residual value yuan) an an 0.8 0.6 an) 10 2.6 3.9 0.5

Solution

Answer:

Scheme B is the best scheme as it provide highest equivalent benefit.

Sr.No.	Purticuers	A	B	C
1	Annual Income	2.6	2	3.9
2	Annual expenditure	0.8	0.6	1.8
3	Net Annual Income (1-2)	1.8	1.4	2.1
4	Life(In years)	8	7	10
5	Cumulative present value Factor for 10% [(1/1+r)\'n]	5.3349	4.8684	6.1446
6	Present value of net annual income (3*5)	9.6028	6.8158	12.90
7	Residual value	0	0.3	0.5
8	Discounting factor for 10%	.4665	.5132	.3855
9	Present value of residual value(7*8)	0	.15396	.1928
10	Total (6+9)	9.6028	6.9698	13.0964
11	Investment	10	6	12
12	Net Present Value (10-11)	-.3972	.9698	1.0964
11	Equivalent Annuity Factor for 10%(Refer Annuity factor Table)	5.3349	4.8684	6.1446
12	Equivalent Annual Benefit (10/11)	-0.0744	0.1992	0.1784