use compound interest factor tables to solve this please Class: MTWR 2. An envir

Question

use compound interest factor tables to solve this please

Class: MTWR 2. An environmental engineer must recommend one of two methods for monitoring high coli and other bacteria in watershed area "hot spots." Estimates are tabulated, a (20 points) colony counts of E. nd the MARR is 10% per year. Method B -250,000 20,000 Method A Initial cost, $ Annual operating cost, S per year 100,000 -30,000 in ye increasing by 5000 each year ar 1 Life, years 6 a. Use future worth analysis to select the better method. b. For a study period of 3 years, use FW analysis to select the better method. 100, 000

Explanation / Answer

Future worth of Method A = -$ 100,000 - $ 30,000 X FVIF 10% , 1 years - $ 35,000 X FVIF10% ,2 years - $ 40,000 FVIF10% , 3 years

Future worth of Method A = - $ 100,000 - $ 30,000 X 1.10 - $ 35,000 X 1.21 - $ 40,000X 1.331

Future worth of Method A = -$ 228,590

========================================================================

Future worth of Method B = -$ 250,000 - $ 20,000 X 1.10 - $ 20,000 X 1.21 - $ 20,000 X 1.331

Future worth of Method B = -$ 322,820

==============================================================================

Method A is to be selected because it has less future worth cost compared to method B which has a higher future worth cost .

Method A Method B Year Cash flows Cash flows 0 ($100,000) ($250,000) 1 ($30,000) ($20,000) 2 ($35,000) ($20,000) 3 ($40,000) ($20,000)

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.