20. An electric utility is taking bids on the purchase, installation, and operation of microwave towers. The following table has some details associated with the two bids that were received. Cost per Tower Equipment cost Installation cost Annual maintenance and inspection fee Annual extra income taxes Life Salvage value Bid A $112,000 $25,000 $2,000 40 years $0 Bid B $98,000 $30,000 $2,500 $800 35 years $0 a. Which is the most economical bid if the interest rate is considered to be 11%? Neither tower will have any salvage value after 20 years of use.

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20. An electric utility is taking bids on the purchase, installation, and operation of microwave
towers. The following table has some details associated with the two bids that were received.
Cost per Tower
Equipment cost
Installation cost
Annual maintenance and inspection fee
Annual extra income taxes
Life
Salvage value
Bid A
$112,000
$25,000
$2,000
40 years
$0
Bid B
$98,000
$30,000
$2,500
$800
35 years
$0
a. Which is the most economical bid if the interest rate is considered to be 11% ? Neither
tower will have any salvage value after 20 years of use.
Transcribed Image Text:20. An electric utility is taking bids on the purchase, installation, and operation of microwave towers. The following table has some details associated with the two bids that were received. Cost per Tower Equipment cost Installation cost Annual maintenance and inspection fee Annual extra income taxes Life Salvage value Bid A $112,000 $25,000 $2,000 40 years $0 Bid B $98,000 $30,000 $2,500 $800 35 years $0 a. Which is the most economical bid if the interest rate is considered to be 11% ? Neither tower will have any salvage value after 20 years of use.
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