Consider the two investments shown below, only one of which can be chosen. They are one-shot...
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Economics
Consider the two investments shown below, only one of which canbe chosen. They are one-shot investments. CalculateAW2-1 assuming 10.8354 interest rate.
EOY
Alternative 1
Alternative 2
0
- 20,369
- 56,679
1
3,844
1,000
2
3,844
1,800
3
3,844
2,600
4
3,844
3,400
5
3,844
4,200
6
5,000
7
5,800
8
6,600
Consider the two investments shown below, only one of which canbe chosen. They are one-shot investments. CalculateAW2-1 assuming 10.8354 interest rate.
EOY | Alternative 1 | Alternative 2 |
0 | - 20,369 | - 56,679 |
1 | 3,844 | 1,000 |
2 | 3,844 | 1,800 |
3 | 3,844 | 2,600 |
4 | 3,844 | 3,400 |
5 | 3,844 | 4,200 |
6 | 5,000 | |
7 | 5,800 | |
8 | 6,600 |
Answer & Explanation Solved by verified expert
Solution
In the given question first we will find out the NPV of both the projects
Then Annual worth= NPV*
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