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Consider the following EOY cash flows for two mutually exclusive alternatives. (one must be chosen)...

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Finance

Consider the following EOY cash flows for two mutually exclusive alternatives. (one must be chosen)

Alternative A Alternative B
Capital investment (TL) 4000 12000

Annual expenses (TL)

 2800 2300
Useful life (years) 3 6
Market value at the end of 2900 2900
Useful life (TL)

The MARR is 8% per year.

a) Determine which alternative should be selected if the repeatability assumption applies. Use PW in your analysis.

PW (A) =?

PW (B) =?

Which one is preferred?

b) Determine which alternative should be selected if the analysis period is 6 years and the repeatability assumption does not apply. Use the AW method.

AW (A) =?

AW (B) =?

Which one is preferred?

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