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Question 4 Consider providing electricity to a home which needs 10 kW of power by the two options A & B given below. The interest rate is 10%, 25 year lifetime, zero inflation, no taxes and 2% insurance. Cost item Capital cost $ Operating & maintenance cost $/year Salvage value $ Evaluate the two options using, Annual cost basis. a. b. C. Life cycle cost basis. Return on investment. Diesel option (A) 12000 10000 2000 PV option (B) 50000 1000 1000

Question 4 Consider providing electricity to a home which needs 10 kW of power by the two options A & B given below. The interest rate is 10%, 25 year lifetime, zero inflation, no taxes and 2% insurance. Cost item Capital cost $ Operating & maintenance cost $/year Salvage value $ Evaluate the two options using, Annual cost basis. a. b. C. Life cycle cost basis. Return on investment. Diesel option (A) 12000 10000 2000 PV option (B) 50000 1000 1000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 4 Consider providing electricity to a home which needs 10 kW of power by the two options A & B given below. The interest rate is 10%, 25 year lifetime, zero inflation, no taxes and 2% insurance. Cost item Diesel option (A) PV option (B) Capital cost $ 12000 50000 Operating & maintenance cost $/year 10000 1000 Salvage value $ 2000 1000 Evaluate the two options using, Annual cost basis. а. b. Life cycle cost basis. с. Return on investment.
Transcribed Image Text:Question 4 Consider providing electricity to a home which needs 10 kW of power by the two options A & B given below. The interest rate is 10%, 25 year lifetime, zero inflation, no taxes and 2% insurance. Cost item Diesel option (A) PV option (B) Capital cost $ 12000 50000 Operating & maintenance cost $/year 10000 1000 Salvage value $ 2000 1000 Evaluate the two options using, Annual cost basis. а. b. Life cycle cost basis. с. Return on investment.
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