Answer to Question #47356 in Economics for Nate

Question

There are two choices for replacing a punch press. The basic model has a useful life
of 8 years while the deluxe model has a useful life of 12 years.
The analysis period for this problem under the Annual Worth criterion is:
Answer
a. 24 years for both.
b. 4 years. for basic and 6 years for deluxe.
c. 8 years for basic and 12 years for deluxe.
d. 20 years.

Answer 1

The annual equivalent worth (AE) criterion provides an alternative basis for measuring the worth of an investment by determining equal payments on an annual basis.
The analysis period for this problem under the Annual Worth criterion is 8 years for basic and 12 years for deluxe.
So, the right answer is c.