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6. In a company's renovation of a small office building, two feasible alternative upgrading the heating, ventilation, and air conditioning (HVAC) system have identified. Either Alternative A or Altermative Bmust be implemented. The costs : follows: Alternative A: Rebuild Coverhaul) the existing HVAC system v Equipment, labor, and materials to rebuild . ETB 18,000 * Annual cost of electricity v Annual maintenance expenses Alternative B: Install a new HVAC system that utilizes existing ductwork ... ETB 32,000 . ETB 2,400 Equipment, labor, and materials to install . ETB 60,000

6. In a company's renovation of a small office building, two feasible alternative upgrading the heating, ventilation, and air conditioning (HVAC) system have identified. Either Alternative A or Altermative Bmust be implemented. The costs : follows: Alternative A: Rebuild Coverhaul) the existing HVAC system v Equipment, labor, and materials to rebuild . ETB 18,000 * Annual cost of electricity v Annual maintenance expenses Alternative B: Install a new HVAC system that utilizes existing ductwork ... ETB 32,000 . ETB 2,400 Equipment, labor, and materials to install . ETB 60,000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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6. In a company's renovation of a small office building, two feasible alternatives for upgrading the heating, ventilation, and air conditioning (HVAC) system have been identified. Either Alternative A or Alternative Bmust be implemented. The costs are as follows: Alternative A: Rebuild Coverhaul) the existing HVAC system v Equipment, labor, and materials to rebuild . ETB 18,000 v Annual cost of electricity . ETB 32,000 v Annual maintenance expenses . ETB 2,400 Alternative B: Install a new HVAC system that utilizes existing ductwork V Equipment, labor, and materials to install . ETB 60,00o * Annual cost of electricity v Annual maintenance expenses v Replacement of a major component four years hence... ETB 9,400 . ETB 9,000 ETB 16,000 At the end of eight years, the estimated market value for Alternative A is ETB 2,000 and for Altemative B it is ETB 8,000. Assume that both alternatives will provide comparable service (comfort) over an eight-year period, by using 8% discount rate Select the feasible alternative by using present value method and Equivalent annual cost method.
Transcribed Image Text:6. In a company's renovation of a small office building, two feasible alternatives for upgrading the heating, ventilation, and air conditioning (HVAC) system have been identified. Either Alternative A or Alternative Bmust be implemented. The costs are as follows: Alternative A: Rebuild Coverhaul) the existing HVAC system v Equipment, labor, and materials to rebuild . ETB 18,000 v Annual cost of electricity . ETB 32,000 v Annual maintenance expenses . ETB 2,400 Alternative B: Install a new HVAC system that utilizes existing ductwork V Equipment, labor, and materials to install . ETB 60,00o * Annual cost of electricity v Annual maintenance expenses v Replacement of a major component four years hence... ETB 9,400 . ETB 9,000 ETB 16,000 At the end of eight years, the estimated market value for Alternative A is ETB 2,000 and for Altemative B it is ETB 8,000. Assume that both alternatives will provide comparable service (comfort) over an eight-year period, by using 8% discount rate Select the feasible alternative by using present value method and Equivalent annual cost method.
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