A home-owner is trying to determine which of three devices

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A home-owner is trying to determine which of three devices to purchase to treat water at the tap. Research has shown the following information: If the home-owner does nothing, she can invest her money in a 4.5%/year savings account. In making her determination, she believes that inflation will be 3%/year. Device #1 : Capital Cost ($) = 1000 O&M Cost ($/yr) = 625 Life Expectancy (years) = 15 Device #2 Capital Cost ($) = 950 O&M Cost ($/yr) = 550 Life Expectancy (years) = 5 Device #3 Capital Cost ($) = 1010 O&M Cost ($/yr) = 582 Life Expectancy (years) = 10 (a) If she were to capitalize her costs for a 30-year life, what unit should she choose? The best answer is # 2 but can you demonstrate how to find this?

Reference no: EM13482953

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