Consider the two air conditioning systems detailed below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%,6%, and 8%. Work this problem (a) by hand and (b) by spreadsheet. System 1- 10,000System 2First cost, $-17,000Annual operating cost, $/yearSalvage (disposal) value, $New compressor and motorcost at midlife, $Life, years-600-150- 100-300-1,750-3,000812

Answered: Image /qna-images/answer/31c17e1d-7caf-4d5c-a725-05388dd15336.jpg

System 1 - 10,000 System 2 First cost, $ -17,000 Annual operating cost, $/year Salvage (disposal) value, $ New compressor and motor cost at midlife, $ Life, years -600 -150 - 100 -300 -1,750 -3,000 8 12

System 1 - 10,000 System 2 First cost, $ -17,000 Annual operating cost, $/year Salvage (disposal) value, $ New compressor and motor cost at midlife, $ Life, years -600 -150 - 100 -300 -1,750 -3,000 8 12

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 5P

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Question

Consider the two air conditioning systems detailed below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%,
6%, and 8%. Work this problem (a) by hand and (b) by spreadsheet.

System 1
- 10,000
System 2
First cost, $
-17,000
Annual operating cost, $/year
Salvage (disposal) value, $
New compressor and motor
cost at midlife, $
Life, years
-600
-150
- 100
-300
-1,750
-3,000
8
12

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