Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $520,000, an AOC of $190,000 per year, and $180,000 salvage value after its 3-year life. Method 2 will cost $890,000 with an AOC of $180,000 and a $180,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 26% higher after three years than it is after five years. If the MARR is 9% per year determine: The annual worth of Method 2, (in $) Round off to the nearest two (2) decimal places, include sign

Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $520,000, an AOC of $190,000 per year, and $180,000 salvage value after its 3-year life. Method 2 will cost $890,000 with an AOC of $180,000 and a $180,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 26% higher after three years than it is after five years. If the MARR is 9% per year determine: The annual worth of Method 2, (in $) Round off to the nearest two (2) decimal places, include sign

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

12. Solve the given question and give the correct answer.

Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $520,000, an
AOC of $190,000 per year, and $180,000 salvage value after its 3-year life. Method 2 will cost $890,000 with an AOC of $180,000 and
a $180,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the
analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 26% higher after three years
than it is after five years. If the MARR is 9% per year determine:
The annual worth of Method 2, (in $)
Round off to the nearest two (2) decimal places, include sign

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