can you answer this pls draw cash flow diagram thanks Two mutually exclusive alternatives are being considered forthe environmental protection equipment at a petroleumrefinery. One of these alternatives must be selected. Theestimated cash flows for each alternative are as follows:Alternative AAlternative BCapital InvestmentAnnual Expenses$20,000$38,0005,5004,000Market Value at end of useful1,0004,200lifeUseful life5 years10 yearsWhich alternative is preferred, based on the repeatabilityassumption? Use AW Method.a.b. Assume the study period is shortened to five years. The marketvalue of Alternative B after five years is estimated to be $15,000.Which alternative would you recommend? Use AW method.

Altenative ACapital investmnet=$20000Annual cost=$5500Market value=$1000Life=5 yearsAltenative…

Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows:

Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows:

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Question

can you answer this pls draw cash flow diagram thanks

Two mutually exclusive alternatives are being considered for
the environmental protection equipment at a petroleum
refinery. One of these alternatives must be selected. The
estimated cash flows for each alternative are as follows:
Alternative A
Alternative B
Capital Investment
Annual Expenses
$20,000
$38,000
5,500
4,000
Market Value at end of useful
1,000
4,200
life
Useful life
5 years
10 years
Which alternative is preferred, based on the repeatability
assumption? Use AW Method.
a.
b. Assume the study period is shortened to five years. The market
value of Alternative B after five years is estimated to be $15,000.
Which alternative would you recommend? Use AW method.

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