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. System Air-Conditioning System 1 Air-Conditioning System 2 First cost, $ –10,000 –14,000 AOC, $ per year –800 –105 Salvage value, $ –100 –300 New compressor and motor cost at midlife, $ –1,700 –3,140 Life, years 8 12 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 $ . When the MARR is 4% 2 Correctis selected. When the MARR is 6% 2 Correctis selected. When the MARR is 8% 2 Correctis selected.
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. System Air-Conditioning System 1 Air-Conditioning System 2 First cost, $ –10,000 –14,000 AOC, $ per year –800 –105 Salvage value, $ –100 –300 New compressor and motor cost at midlife, $ –1,700 –3,140 Life, years 8 12 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 $ . When the MARR is 4% 2 Correctis selected. When the MARR is 6% 2 Correctis selected. When the MARR is 8% 2 Correctis selected.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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.
| System | Air-Conditioning System 1 | Air-Conditioning System 2 |
| First cost, $ | –10,000 | –14,000 |
| AOC, $ per year | –800 | –105 |
| Salvage value, $ | –100 | –300 |
| New compressor and motor cost at midlife, $ | –1,700 | –3,140 |
| Life, years | 8 | 12 |
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 $ .
When the MARR is 4% 2 Correctis selected.
When the MARR is 6% 2 Correctis selected.
When the MARR is 8% 2 Correctis selected.
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