Question
In: Economics
Potable water is in short supply in many countries. To address this need, two mutually exclusive...
Potable water is in short supply in many countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in China. Doing nothing is not an option. Assume the repeatability of cash flows for alternative 1.
a. Use the PW method to determine which system should be selected when MARR=8% per year.
b. Which system should be selected when MARR=15% per year?
|
System 1 |
System 2 |
|
|---|---|---|
|
Capital investment |
$100,000 |
$150,000 |
|
Annual revenues |
55,000 |
70,000 |
|
Annual expenses |
22,000 |
40,000 |
|
MV at end of useful life |
20,000 |
0 |
|
Useful life |
5 years |
10 years |
|
IRR |
22.8% |
15.1% |
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Rahul Sunny answered 2 years agoRelated Solutions
Potable water is in short supply in many developing countries. To address this need, two mutually...
Potable water is in short supply in many developing countries.
To address this need, two mutually exclusive water purification
systems are being considered for implementation in a developing
country. Doing nothing is not an option. The MARR is
66%
per year.
Answer the following questions:
a. Calculate the net AW of each system over the service
life.
b.Calculate the modified B/C ratio for each of the two
systems.
c. Use the B/C ratio method to determine which system is more...
The government of a particular city is considering two mutually exclusive water purification systems for implementation....
The government of a particular city is considering two mutually
exclusive water purification systems for implementation. Doing
nothing is not an option. Refer to the data below to determine
which system should be selected, when MARR = 12% per year, and
Use the AW method
Use the PW method
Use rate of return method
Alternative
System 1
System 2
Capital Investment
$100,000
$150,000
Annual revenues
$50,000
$70,000
Annual expenses
$22,000
$40,000
Market value at end of useful life
$20,000
$12,000...
The government of a particular city is considering two mutually exclusive water purification systems for implementation....
The government of a particular city is considering two mutually
exclusive water purification systems for implementation. Doing
nothing is not an option. Refer to the data below to determine
which system should be selected, when MARR = 9% per year, and
Use the AW method
Use rate of return method
Please Solve number b only !! Use rate of return method
Alternative
System 1
System 2
Capital Investment
$100,000
$150,000
Annual revenues
$50,000
$70,000
Annual expenses
$22,000
$40,000
Market value...
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