4. (Chapter 10) A town in northern Colorado is planning on investing in a water purification system. Three mutually exclusive systems have been proposed, and their capital investment costs and net annual benefits are the following values (Salvage values are provided in the table). If the town's MARR is 15% per year use the Incremental Benefit Cost ratio method to determine which system is the best Draw cash flow diagrams for each alternative as well as incremental scenarios before calculating Incremental Benefit Cost ratio. EOY 0 1 2 3 4 Salvage Value A -$105,000 70,000 55,000 42,000 35,000 $10,000 System B -$255,000 100,000 130,000 90,000 70,000 $40,000 C -$110,000 60,000 60,000 60,000 60,000 $30,000
4. (Chapter 10) A town in northern Colorado is planning on investing in a water purification system. Three mutually exclusive systems have been proposed, and their capital investment costs and net annual benefits are the following values (Salvage values are provided in the table). If the town's MARR is 15% per year use the Incremental Benefit Cost ratio method to determine which system is the best Draw cash flow diagrams for each alternative as well as incremental scenarios before calculating Incremental Benefit Cost ratio. EOY 0 1 2 3 4 Salvage Value A -$105,000 70,000 55,000 42,000 35,000 $10,000 System B -$255,000 100,000 130,000 90,000 70,000 $40,000 C -$110,000 60,000 60,000 60,000 60,000 $30,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You must show all of vour calculation. You
cannot use Excel to solve the problem. You need to show all the steps and
process while solving the problem. Draw the cash flow
diagrams properly. Improper drawn cash flow diagrams will be penalized.
Transcribed Image Text:4. (Chapter 10) A town in northern Colorado is planning on investing in a water purification
system. Three mutually exclusive systems have been proposed, and their capital investment costs
and net annual benefits are the following values (Salvage values are provided in the table). If the
town's MARR is 15% per year use the Incremental Benefit Cost ratio method to determine
which system is the best. Draw cash flow diagrams for each alternative as well as
incremental scenarios before calculating Incremental Benefit Cost ratio.
EOY
0
1
2
3
4
Salvage Value
A
-$105,000
70,000
55,000
42,000
35,000
$10,000
System
B
-$255,000
100,000
130,000
90,000
70,000
$40,000
-$110,000
60,000
60,000
60,000
60,000
$30,000
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