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Assessing project worth through Present and Annual worth

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You are considering two mutually exclusive alternatives with different useful lives of 4 and 6 years as shown below. The MARR is 10% per year and the market value is 0 at the end of each useful life.

A B
Capital investment $3,500 $5,000
Annual cash flow 1,255 1,480
Useful life in years 4 6

Determine which alternative to recommend by the PW method and the AW method.

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Solution Summary

The problem deals with assessing a project through its present worth and annual worth.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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