What is the equivalent uniform annual worth of project

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Reference no: EM131013861

A small company has a choice between 2 projects. Because the company is highly specialized, it picks its projects carefully. Project A has annual expenses of $556 and annual profit of $23340. The project will last for 5 years. Project B has annual expenses of $3278 and annual profit of $29293. It will require the purchase of specialized equipment of $34708 at the beginning of the project. The equipment will have a $2926 salvage value when the project ends. The contract for the project is for 9 years. Assume an interest rate of 3%, compounded annually. Comparing the two projects, what is the equivalent uniform annual worth (EUAW) of Project B? Note: For the sake of comparison, assume a project would be replaced with an identical project when it ended.

Reference no: EM131013861

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