Question

Do you ass Bureau of reclamation is considered two proposals for increasing the capacity of Maine drainage canal and an agricultural region proposal a requires for edging the canal to remove sediment in with the bear is planning to purchased a dredging equipment for 650000 with a 10 year life and a $17,000 value annual operating costs are 170,000 proposal be used to line the canal concrete at the initial cost of 4 million the lining is assumed to be permanent with maintenance cost of 5000 per year assuming interest rate of 5% per year.

Determine the annual worth Proposal A.

A.-82,824

B.-252,825

C.-222,824

D.-92,824

Determine the annual worth of proposal B.

A.-205,000

B.-4,005000

C.-200,000

D.-4,000,000

Answer 1

Proposal A:
AW of first cost = -650000*0.05*1.05^10/(1.05^10-1) =	$         -84,178
Annual operating cost	$      -1,70,000
AW of salvage value = 17000*0.05/(1.05^10-1) =	$ 1,352
AW of proposal	$      -2,52,826
Answer: [B] [Difference in solution due to rounding off difference]
Proposal B:
AW = -4000000*5%-5000 =	$      -2,05,000
Answer: [A]