Alternative A Rebuild ( overhaul) the existing HVAC system • Equipment, labor, and materials to rebuild • Annual cost of electricity. • Annual maintenance expenses $18,000 32,000 2,400 Alternative B Install a new HVAC system that utilizes existing ductwork • Equipment, labor, and materials to install Annual cost of electricity ...... Annual maintenance expenses • Replacement of a major component four years hence .. $60,000 9,000 16,000 9,400
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 B must be implemented. The costs are as shown follows (atatched): At the end of eight years, the estimated market value for Alternative A is $2,000
and for Alternative B it is $8,000. Assume that both alternatives will provide
comparable service (comfort) over an eight-year period, and assume that the major component replaced in Alternative B will have no market value at EOY eight. (1) Use a cash-flow table and end-of-year convention to tabulate the net
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