Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i =12% per year and f = 3% per year.
 FIGURE 1.png)
if = 0.12 + 0.03 + (0.12)(0.03) = 15.36%
CCX = -18,500,000 – 25,000/0.1536
= $-18,662,760
For alternative Y, first find AW and then divide by if
AWY = -9,000,000(A/P,15.36%,10) – 10,000 + 82,000(A/F,15.36%,10)
= -9,000,000(0.20199) – 10,000 + 82,000(0.04839)
= $-1,823,942
CCY = 1,823,942/0.1536
= $-11,874,622
Select alternative Y
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