# HW3 Dianna Padilla - 8.13 PW of Benefit =(uniform annual...

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8.13 PW of Benefit = (uniform annual benefit) (P/A, %, years) Alt A: PW of Cost = \$10,700 PW of Benefit = 2100 (P/A, 10%, 8) = 2100(5.335) = 11203.5 Alt B: PW of Cost = \$5500 – (5500)(P/F, 10%,4) = 9256.5 PW of Benefit = 1800 (P/A, 10%, 8) = 1800(5.335) =9603 A,B have ROR greater than 10% = good. When you graph it, slope is greater than one. When slope is greater than NPW= 0 line which slope is one, then you choose the one with higher cost. Alt A desired. 8.18 Alt A Cost: 100,000 i=1.25% Alt. B Cost: 100,000 i=15% Alt. C Cost: 2700/mo ALT A: A= P (A/P, 1.25, 60) 350,000(.15) A= 8,330 PW of Cost 100,000 + 8330(F/A, 1.256, 60) + 1000(P/A, 20%, 60)- 600000(P/F, 1.25%, 60) 100,000 + 8330(88.575) + 1000(5)- 600000(.4746) = 232,879.75 PW of Benefit 2500(P/A, 20%, 60) = 2500(5)= 12500 ALT B:

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PW of Cost 100,000 + 8330(F/A, 1.256, 60) - 600000(P/F, 1.25%, 60) 100,000 + 8330(88.575) + 1000(5)- 600000(.4746) = 553069.75 8.25 Difference B-C A-C Incrementa l cost \$7000 \$35000 Uniform Annual Benefit
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HW3 Dianna Padilla - 8.13 PW of Benefit =(uniform annual...

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