Compare two alternatives, A and B, on the basis of a present worth evaluation using i = 10% per year and a study period of 8 years.


PWA = -15,000 – 6000(P/A,10%,8) – 12,000(P/F10%,4) + 3000(P/F,10%,8)
= -15,000 – 6000(5.3349) – 12,000(0.6830) + 3000(0.4665)
= $-53,806

PWB = -28,000 – 9000(P/A,10%,8) – 2000(P/F,10%,4) + 5000(P/F,10%,8)
= -28,000 – 9000(5.3349) – 2000(0.6380) + 5000(0.4665)
= $-75,048

Select Alternative A

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