Two types of power converters are under consideration for a specific application
ID: 1180770 • Letter: T
Question
Two types of power converters are under consideration for a specific application. An economic comparison is to be made using an interest rate of 20%. Using the Annual Cash Flow Analysis method:
Data
Alternative
Alpha
Beta
Service Life (Years)
5
9
First Cost
$10,000
$20,000
Salvage Value
0
$5,000
Annual Operating Cost
$2,500
$1,200
(a) Compute the equivalent annual costs of each alternative and recommend the economically superior alternative.
(b) Determine a salvage value for the Beta system such that the Beta system will have an equivalent uniform annual cost equal to the Alpha system.
Data
Alternative
Alpha
Beta
Service Life (Years)
5
9
First Cost
$10,000
$20,000
Salvage Value
0
$5,000
Annual Operating Cost
$2,500
$1,200
Explanation / Answer
D.
Alpha; $6,611
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