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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.