Determine a salvage value for the beta system

Reference no: EM13202521

Two types of power converters are under consideration for a specific application. An economic comparison is to be made using a MARR of 20% and the following cost estimates:
Data Alpha Beta
Service life (years) 5 9
First cost $10,000 $20,000
Salvage Value 0 5000
Annual operating 2500 1200
Cost

a. Determine the Equivalent Annual Costs of the two alternatives and recommend the economically superior system.
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.

Reference no: EM13202521

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