Question

A	B	C
Initial cost	$1500	$900	$1200
Annual benefit	$800	$200	$180
Salvage value	$500	$900	$0
Life in years	2	3	infinite
MARR	10%	10%	10%

Assume that alt. A will be needed for 6 years. The NPW of alt. A is _____.

		$1100
		$1342
		$600
		$757

Answer 1

Answer is $ 757.

The explanation is as follows:

Year	Cashflows	PVF @ 10%	Present Value
0	-1500	1.000	-1500.00
1	800	0.909	727.27
2	-200	0.826	-165.29
3	800	0.751	601.05
4	-200	0.683	-136.60
5	800	0.621	496.74
6	1300	0.564	733.82
Present worth of Cash flows			756.99
Note: In year 2 and 4, the cash flows is computed by adding the salvage value and deducting the initial investment to be made again.
Note: In Year 6, salvage value shall be added in the annual benefit to compute the cash flows