AW of infinite-life alts

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AW of infinite-life alts Basic equation is A = Pi Example: Compare the alternatives below using AW and i=10% per year First cost, $ 50,000 250,000 C D Annual cost, $/yr 20,000 9,000 Salvage value, $ 5,000 75,000 Life, yrs 5 ∞ Solution: AWC = -50,000(A/P,10%,5) – 20,000 + 5,000(A/F,10%,5) = -$32,371 AWD= -250,000(0.10) – 9,000 = -$34,000 Select altern1ative C