Question

A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $7,500 to install and will have a useful life of 4 years with no salvage value. Annual costs for inspection, cleaning, etc. are expected to be $1,750. A new power line will cost $15,500 to install, with power costs expected to be $500 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest rate of 11% per year, which alternative should be selected on the basis of a future worth analysis?

The future worth of solar cells is $... and that of electric line is $... .

Answer 1

Given data :

A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power.

Solar cells will cost $7,500 to install and will have a useful life of 4 years with no salvage value.

Annual costs for inspection, cleaning, etc. are expected to be $1,750.

A new power line will cost $15,500 to install, with power costs expected to be $500 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero.

At an interest rate of 11% per year.

r = 11 %

To calculate : The future worth of a Solar Cell and that of electric line.

Now,

Therefore the worth of Solar cell is $ 19625.75 and that of electric line is $25883.50