A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $19,000 to install and will have a useful life of 4 years with no salvage value. Annual costs for inspection, cleaning, etc. are expected to be $1,100. A new power line will cost $9,000 to install, with power costs expected to be $800 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest rate of 14% per year, which alternative should be selected on the basis of a future worth analysis? Which alternative should be selected? (A) Solar Cells B) Electric Cells

A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $19,000 to install and will have a useful life of 4 years with no salvage value. Annual costs for inspection, cleaning, etc. are expected to be $1,100. A new power line will cost $9,000 to install, with power costs expected to be $800 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest rate of 14% per year, which alternative should be selected on the basis of a future worth analysis? Which alternative should be selected? (A) Solar Cells B) Electric Cells

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

9. Solve the given question and give the correct answer.

A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using
conventional power. Solar cells will cost $19,000 to install and will have a useful life of 4 years with no salvage value. Annual costs
for inspection, cleaning, etc. are expected to be $1,100. A new power line will cost $9,000 to install, with power costs expected to be
$800 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest
rate of 14% per year, which alternative should be selected on the basis of a future worth analysis?
Which alternative should be selected?
(A) Solar Cells
B) Electric Cells

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