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Consider the following two mutually exclusive alternatives:

Alternative 1                        Alternative 2

Cost                                                    $9,000                                   $12,500

Uniform annual benefit                        1,300                                       1,900

Useful life, in years                            forever                                       12

Alternative 2 may be replaced with an identical item every 12 years at the $12,500 cost and will have the $1,900 uniform annual benefit. Assume a 10% interest rate and you must use annual cash flow analysis. What is the equivalent uniform annual worth of each alternative?

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