Consider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. Air-Conditioning System 1 System First cost, $ AOC, $ per year Salvage value, $ New compressor and motor cost at midlife, $ Life, years -10,000 -500 -100 -1,850 8 The annual worth of air-conditioning system 1 when the MARR is 4% is $[ The annual worth of air-conditioning system 2 when the MARR is 4% is $ The annual worth of air-conditioning system 1 when the MARR is 6% is $ The annual worth of air-conditioning system 2 when the MARR is 6% is $ The annual worth of air-conditioning system 1 when the MARR is 8% is $ The annual worth of air-conditioning system 2 when the MARR is 8% is $ Air-Conditioning System 2 -14,000 -85 -300 -2,540 12
Consider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. Air-Conditioning System 1 System First cost, $ AOC, $ per year Salvage value, $ New compressor and motor cost at midlife, $ Life, years -10,000 -500 -100 -1,850 8 The annual worth of air-conditioning system 1 when the MARR is 4% is $[ The annual worth of air-conditioning system 2 when the MARR is 4% is $ The annual worth of air-conditioning system 1 when the MARR is 6% is $ The annual worth of air-conditioning system 2 when the MARR is 6% is $ The annual worth of air-conditioning system 1 when the MARR is 8% is $ The annual worth of air-conditioning system 2 when the MARR is 8% is $ Air-Conditioning System 2 -14,000 -85 -300 -2,540 12
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
Problem 1PS
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Transcribed Image Text:Consider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the
economic decision to MARR values of 4%, 6%, and 8% per year.
Air-Conditioning System 1
System
First cost, $
AOC, $ per year
Salvage value, $
New compressor and motor cost at
midlife, $
Life, years
-10,000
-500
-100
-1,850
8
The annual worth of air-conditioning system 1 when the MARR is 4% is $
The annual worth of air-conditioning system 2 when the MARR is 4% is $
The annual worth of air-conditioning system 1 when the MARR is 6% is $
The annual worth of air-conditioning system 2 when the MARR is 6% is $
The annual worth of air-conditioning system 1 when the MARR is 8% is $
The annual worth of air-conditioning system 2 when the MARR is 8% is $
Air-Conditioning System 2
-14,000
-85
-300
-2,540
12
Expert Solution
Step 1
Annual worth
The annual worth is the sum of all the advantages and expenses over the course of a year. We therefore give a single number—the yearly worth—that represents the net of all the various advantages and expenses incurred at various moments throughout the course of a year.
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