Homework Help: statistics

Posted by Ellis on Friday, January 25, 2013 at 3:36am.

Suppose that you are evaluating two different alternatives. The inflated cost stream for alternative A is $8,000 for year 1, $9,000 for year 2, $12,000 for year 3, 12,000 for year 4, and $13,000 for year 5. The inflated cost stream for alternative B is $10,000 for year 1, $12,000 for year 2, $10,000 for year 3, $9,000 for year 4, and $9,000 for year 5. Assume that the cost of capital is 12%. Which alternative would you select? At which point in time will the selected alternative assume a point of preference over the other (i.e, break-even point)?

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