a. Do the evaluation based on Future worth (FW) method b. Do the evaluation based on Annual worth (AW) method. c. Redo the evaluation again based on Capitalized Cost (CC) method. (Tip: use the results from part b)

a. Do the evaluation based on Future worth (FW) method b. Do the evaluation based on Annual worth (AW) method. c. Redo the evaluation again based on Capitalized Cost (CC) method. (Tip: use the results from part b)

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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Question

2- According to mutually exclusive (ME) alternatives, you have been
asked to select the better alternative between two projects at 8%
per year.
Project A
Project B
First cost, $
-10000
-14000
Annual cost, $ per year
-300
-200
Salvage value, $
Estimated life, years
4000
2000
2
a. Do the evaluation based on Future worth (FW) method
b. Do the evaluation based on Annual worth (AW) method.
c. Redo the evaluation again based on Capitalized Cost (CC)
method. (Tip: use the results from part b)
d. If only project B run forever. Redo the evaluation again
based on Capitalized Cost (CC) method. (Tip: use the results
from part b)

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