9) 6-34. Potable water is in short supply in many countries. To address this need, two mutually exclusive water purification systems are being con- sidered for implementation in China. Doing nothing is not an option. Refer to the data below and state your key assumptions in working this problem. (6.5) System 1 System 2 . Capital investment Annual revenues $100,000 $150,000 50,000 70,000 Annual expenses 22,000 40,000 MV at end of useful life 20,000 0 Useful life 5 years 10 years IRR 16.5% 15.1% 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?
9) 6-34. Potable water is in short supply in many countries. To address this need, two mutually exclusive water purification systems are being con- sidered for implementation in China. Doing nothing is not an option. Refer to the data below and state your key assumptions in working this problem. (6.5) System 1 System 2 . Capital investment Annual revenues $100,000 $150,000 50,000 70,000 Annual expenses 22,000 40,000 MV at end of useful life 20,000 0 Useful life 5 years 10 years IRR 16.5% 15.1% 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?
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.11P
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Transcribed Image Text:9)
6-34. Potable water is in short supply in many
countries. To address this need, two mutually
exclusive water purification systems are being con-
sidered for implementation in China. Doing nothing is
not an option. Refer to the data below and state your
key assumptions in working this problem. (6.5)
System 1 System 2
.
Capital investment
Annual revenues
$100,000
$150,000
50,000
70,000
Annual expenses
22,000
40,000
MV at end of useful life
20,000
0
Useful life
5 years
10 years
IRR
16.5%
15.1%
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?
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