Net disbursement for the plans

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Two plans are under consideration to provide certain facilities for a publicly owned public utility. Each plan is designed to provide enough capacity during the next 18 years. Plan I requires a initial investment of $50,00. This will be followed by an investment of $25,000 at the end of 9 years. During the first 9 years, annual disbursement will be $11,000;during the final 9 years, they will be $18,000. There will be a $10,000 savage value at the end of the 18th year. Plan II requires an initial investment of $30,000. This will be followed by an investment of $30,000 at the end of 6 years and an investment of $20,000 at the end of 12 years. During the first 6 years annual disbursement will be $8000; during the second 6 years they will be $16,000; during the final 6 years they will be 25,000. There will be no salvage value at the end of the 18th year. Using i=9 percent compare the present worth of the net disbursement for the plans.

Reference no: EM131079454

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