Question

Compare two mutually exclusive alternatives below using annual worth analysis at MARR = 10% per year. Which alternative should be selected?

Alternatives	Alternative 1	Alternative 2
First cost, $	-90,000	-750,000
Annual cost, $/year	-50,000	-10,000
Salvage value, $	8,000	-
Life, years	5	∞

		Alternative 2 and -$85,000
		Alternative 1 and -$72,450
		Alternative 2 and -$72,450
		Alternative 1 and -$65,000

Answer 1