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. Assume the repeatability of cash flows for alternative 1.
System 1 System 2
Capital invest 100,000 150,000
Annual rev 50,000 65,000
Annual expenses 25,000 45,000
Market value (end) 20,000 0
life span 5yrs 10yrs
Irr 12.5% 5.6%
a. Use the PW method to determine which system should be selected when MARR=8?% per year.
b. Which system should be selected when MARR=12?% per? year?