The cash flow estimates of a project are shown in the table below, and the MARR is 6% per year. Of thefollowing three relations, the correct one to calculate the annual worth of this project is:Cash FlowFirst cost, SAnnual cost, S per yearRevenue, S per yearSalvage value, SLife, years-200-501202510Relation 1: AW=-200(A/P,6%,10)+70+25(A/F,6%,10)Relation 2: AW=[-200-50(P/A,6%,10)+120(P/A,6%,10)+25(P/F,6%,10)|(A/P,6%,10)Relation 3: AW=-200(F/P,6%,10)+25+(-50+120)(A/P,6%,10)O Relation 1 and 3OARelation 1 and 2O Only Relation 1O Only Relation 3

Annual worth can be calculated by present value method and future value method.

ving three relations, the correct one to calculate the annual v Cash Flow cost, S ual cost, S per year enue, S per year age value, S - years -200 -50 120 25 10 ion 1: AW=-200(A/P,6%,10)+70+25(A/F,6%,10) ion 2: AW-(-200-50(P/A,6%,10)+120(P/A,6%,10)+25(P/F,6% ion 3: AW--200(F/P,6%,10)+25+(-50+120)(A/P,6%,10) elation 1 and 3

ving three relations, the correct one to calculate the annual v Cash Flow cost, S ual cost, S per year enue, S per year age value, S - years -200 -50 120 25 10 ion 1: AW=-200(A/P,6%,10)+70+25(A/F,6%,10) ion 2: AW-(-200-50(P/A,6%,10)+120(P/A,6%,10)+25(P/F,6% ion 3: AW--200(F/P,6%,10)+25+(-50+120)(A/P,6%,10) elation 1 and 3

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

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