Two mutually exclusive water purification systems are being considered for implementation overseas. Refer to the data...
Two mutually exclusive water purification systems are being considered for implementation overseas. Refer to the data below:
|
System 1 |
System 2 |
|
|
Capital investment Annual revenues Annual expenses MV at end of useful life Useful life |
$100,000 $50,000 $15,000 $20,000 13 years |
$150,000 $75,000 $20,000 0 26 years |
If MARR = 30 % per year, determine the present worth (PW) of the most profitable water purification system to use. Use the repeatability assumption. (Enter your answer as a number without the dollar sign.)
Homework Answers
PW of system 1 = -100000 - 100000(P/F, 30%, 13) + 20000(P/F, 30%, 13) + 20000(P/F, 30%, 26) + (50000 -
15000)(P/A, 30%, 26)
= -100000 - 80000*0.033017 + 20000*0.001090 + 35000*3.3297
= $13,920.
PW of system 2 = -150,000 + (75000 - 20000)(P/A, 30%, 26) + 0(P/F, 30%, 26)
= -150000 + PV(30%,26,-55000,0)
= $33,133.48
The present worth (PW) of the most profitable water purification system to use is $33,133.48 (system 2)
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