Method A Method B Initial cost, $ - 100,000 - 250,000 Annual operating cost, $ per year - 30,000 in year 1, increasing by $5000 each year -20,000 Life, years 3 6
Method A Method B Initial cost, $ - 100,000 - 250,000 Annual operating cost, $ per year - 30,000 in year 1, increasing by $5000 each year -20,000 Life, years 3 6
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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Question
An environmental engineer must recommend one of two methods for monitoring high colony counts of E. coli and other bacteria in watershed area “hot spots.” Estimates are tabulated and the MARR is 10% per year. Use tabulated factors or a spreadsheet for your analysis.
a. Use present worth analysis to select the better method.
b. For a study period of 3 years, use PW analysis to select the better method.
Transcribed Image Text:Method A
Method B
Initial cost, $
- 100,000
- 250,000
Annual operating cost,
$ per year
- 30,000 in year 1,
increasing by $5000
each year
-20,000
Life, years
3
6
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