Answer:
Alternative X gives a better net present worth of $3433.88 compared to Alternative Y with a present networth of $ 2,760.41
Explanation:
Using the present analysis which is also the net present value analysis,the net present of the two alternatives can be compared so as to choose the project with the higher net present worth.
The net present is simply discounting the project cash flows in order to know their worth today as calculated below
Alternative X present net-worth
=-$12500+($6800*1/(1+10%)^1)+($6800+$5000)*1/(1+10%)^2=$ 3,433.88
Alternative Y present net-worth
=-$8900+($2000*1/(1+10%)^1)+($2000*1/(1+10%)^2)+($2000+$8900)*(1/(1+10%)^3)=$2,760.41