QUESTION

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# 5. Four mutually exclusive alternatives are available for purchasing a piece of construction equipment by a construction firm. The useful life of each alternative is 10 years. The cash flow details of alternatives are presented in Table 1. If the construction firm's minimum attractive rate of return (MARR) is $10 \%$ per year, select the best alternative using the present worth method \begin{tabular}{|l|c|c|c|c|} \hline \multicolumn{1}{|c|}{ Alternative } & Alternative-1 & Alternative-2 & Alternative-3 & Alternative-4 \\ \hline Cash flow & $48,00,000$ & $53,00,000$ & $59,00,000$ & $45,00,000$ \\ \hline Initial investment & $7,25,000$ & $8,05,000$ & $9,30,000$ & $6,50,000$ \\ \hline $\begin{array}{l}\text { Annual profit (after deducting } \\ \text { expenses) }\end{array}$ & $9,90,000$ & $11,85,000$ & $13,65,000$ & $9,40,000$ \\ \hline Salvage value & 10 & 10 & 10 & 10 \\ \hline Useful life (Years) & & & \\ \hline \end{tabular} 6. Compare Present worth analysis, future worth analysis and annual worth analysis of project evaluation.  