E355-Spring08-Test1-Sol1.2Excel Consulting is considering upgrading the HVAC system currently installed in its facility. A contractor has suggested the following two alternatives, with their estimated yearly savings in energy costs:DescriptionAlternative AAlternative BPFirst Cost70,00025,000+AAnnual Revenue15,0005,000-AAnnual Expense5,000010,000SSalvage value005,000NLife126IMARR20%20%Note: All units are in '000 dollarsa) Calculate the PW for each option. [4 point]PW =A(P/A, i, N) + S(P/F, i, N) - PPWPlanA=(15,000$ - 5,000$ ) X (P/A, 20%,12) + -$ X(P/F, 20%,12)-70,000$ PWPlanA=(15,000$ - 5,000$ ) X (4.43921) + -$ X0.1121-70,000$ PWA=-25607.90 KPWPlanB=(5,000$ - -$ ) X (P/A,20%,6)) + -$ X(P/F,20%, 6)-25,000$ PWB=(5,000$
This is the end of the preview.
access the rest of the document.
Christopher Nolan, salvage value, Alternative rock, PW PlanA= PW