System 1 System 2 Capital investment Annual revenues $100,000 $150,000 70,000 50,000 Annual expenses 22,000 40,000 MV at end of useful life 20,000 Useful life 5 years 10 years IRR 16.5% 15.1%
System 1 System 2 Capital investment Annual revenues $100,000 $150,000 70,000 50,000 Annual expenses 22,000 40,000 MV at end of useful life 20,000 Useful life 5 years 10 years IRR 16.5% 15.1%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Potable water is in short supply in many countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in China. Doing nothing is not an option. Refer to the data below and state your key assumptions in working this problem. Solve, a. Use thePWmethod to determine which system should be selected when MARR = 8% per year. b. Which system should be selected whenMARR = 15% per year?
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