Offering three do-something and one do-nothing alternation

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A cost analysis is to be made to determine what, if anything, should be done in a situation offering three "do-something" and one "do-nothing" alternatives. Estimates of the cost and benefits are as follows:

Alternatives 1 2 3 4

Cost 500-- 600 -- 700 -- 0

UAB 135 --100 --100 -- 0

Salvage 0 -- 250-- 180 --10

Life(yrs) 5 -- 5 -- 10 -- 0

Use a 10-year analysis period for the four mutually exclusive alternatives. At the end of Year 5, Alternatives 1 and 2 may be replaced with identical alternatives, which alternative should be selected?

a.) if an 8% interest rate is used?

Reference no: EM131597826

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