Two mutually exclusive alternatives are under consideration, with the same initial investment of $300,000. The difference between the alternatives is in the revenue. Alternative A will earn a fixed revenue of $60,000 per year. The revenue for Alternative B starts slowly at an estimated $10,000 in the first year, with a growth of $15,000 per year. The MARR is 896 per year, and the maximum projection period is 10 years for either alternative. Use: (a) payback analysis to select the more economical alternative. Ans: Select based on payback analysis
(b) present worth analysis (for n=10 years) to select the more economical alternative. Ans: Select based on Present Worth analysis
(c) Is there any difference in selection between the two analysis?Ans: