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AW of infinite-life alts

Calculate the annual worth (AW) for two investment alternatives using a basic equation where A = Pi. Compare the given costs and salvage values for each alternative to make the best decision for your investment.

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AW of infinite-life alts

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  1. Basic equation is A = Pi Example: Compare the alternatives below using AW and i=10% per year C D First cost, $ 50,000 250,000 Annual cost, $/yr 20,000 9,000 Salvage value, $ 5,000 75,000 Life, yrs 5 ∞ AW of infinite-life alts Solution: AWC = -50,000(A/P,10%,5) – 20,000 + 5,000(A/F,10%,5) = -$32,371 AWD= -250,000(0.10) – 9,000 = -$34,000 Select altern1ative C

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