The following problem is based on the these cash flows and an interest rate of 10% per year.



In comparing the alternatives by the annual worth method, the AW of X is determined by the follow­ing equation:



(a) ?200,000(0.10) ? 60,000 + 20,000(0.10)

(b) ?200,000(A?P,10%,5) ? 60,000 + 20,000(A?F,10%,5)

(c) ?200,000(A?P,10%,5) ? 60,000 ? 20,000(A?F,10%,5)

(d) ?200,000(0.10) ? 60,000 + 20,000(A?F,10%,5)


(b) ?200,000(A?P,10%,5) ? 60,000 + 20,000(A?F,10%,5)

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