A company that makes food-friendly silicone (for use in cooking and baking pan coatings) is considering the independent projects shown, all of which can be considered to be viable for only 10 years. If the company’s MARR is 15% per year, determine which should be selected on the basis of a present worth analysis. Financial values are in $1000 units.
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Compare each alternative against DN and select all with PW ? 0. Monetary units are $1000.
PWA = -1200 + 200(P/A,15%,10) + 5(P/F,15%,10)
= -1200 + 200(5.0188) + 5(0.2472)
= $-195.004 (Reject)
PWB = -2000 + 400(P/A,15%,10) + 6(P/F,15%,10)
= -2000 + 400(5.0188) + 6(0.2472)
= $9.003 (Accept)
PWC = -5000 + 1100(P/A,15%,10) + 8(P/F,15%,10)
= -5000 + 1100(5.0188) + 8(0.2472)
= $522.658 (Accept)
PWD = -7000 + 1300(P/A,15%,10) + 7(P/F,15%,10)
= -7000 + 1300(5.0188) + 7(0.2472)
= $-473.830 (Reject)
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