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Question 6.BB: Refer to Problem 6-AA. Which thickness would you recommend i...

Refer to Problem 6-AA. Which thickness would you recommend if the study period was 4 years? Use the imputed market value technique to estimate the market value of the 5 cm alternative after 4 years. (6.5)

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CR_{5cm} (15%)  = $40,000 (A/P, 15%, 6) = $10,568
MV_{5cm} after 4 years  = $10,568 (P/A, 15%, 2) = $17,180
AW_{5cm}(15%) = −$40,000 (A/P, 15%, 4) + $7,500 + $17,180 (A/F, 15%, 4) = −$3,071
Still recommend 2 cm thickness.

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