Calculate the pw at the marr


Problem:

The management of your company is considering adding a SO2 scrubber unit to your present plant to remove SO2 from stack gases, and you have conceived four designs to accomplish this task. Management does not believe that cleaning the gas just to reduce air pollution is worthwhile unless the government forces this. However, management would make the investment if more than a l0% annual rate of return on the investment can be earned (before taxes) by SO2 savings. Assume that your company can always invest the money and earn a l0% return (MARR = 10). The recommended system, if any, will have to "pay its own way." The life of each alternative is 10 years.

Following are the results of your research of the four designs. Which, if any, would you recommend to your management, and why?

Tot Install Annual OP Val of SO2 MKT Value At End
Cost    Cost Recover Yearly of 10 Years
1 $100,000 $21,000    $41,000 $0
2 160,000 33,000    60,000    20,000
3 200,000 41,000    69,000    40,000
4 260,000 53,000    98,500    10,000

Need to calculate the PW at the MARR, IRR, and Incremental Analysis.

Solution Preview :

Prepared by a verified Expert
Finance Basics: Calculate the pw at the marr
Reference No:- TGS01811064

Now Priced at $25 (50% Discount)

Recommended (92%)

Rated (4.4/5)