The following data is available for three different alternatives. Assume an interest rate of 2% per year, compounded annually. Alternative A Alternative B Alternative C
Initial Cost 6,000 7,200 12,000
Annual Benefit 1,450 2,339 5,680
Useful Life (yrs) infinite 16 8
Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative.
A. Choose Alternative A because it lasts the longest
B. Choose Alternative A because its net present worth is postive
C. Choose Alterntive C because it has the highest annual benefit
D. Choose Alternative C because its net present worth is $111,658.17 more than its nearest competitor