Estimate annual energy and maintenance cost

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A construction company must set up a temporary office building at a construction site. Two alternate schemes are proposed for heating this building. "Bottled gas" can be used for floor type furnaces, or electric radiant panels can be installed in the walls and ceiling. It is estimated that the building will be used for 5 years before being dismantled.
The gas installation will require an investment of$3,200. It is believed its net realizable value will be zero at the end of the 5 years. The estimated annual fuel and maintenance cost is $800.
The electric radiant panel installation will require an investment of $4,600; it has an estimated salvage value of $1,000. Estimated annual energy and maintenance cost is $500. Choice of the electric installation will cause an estimated extra payment for income taxes of $110 a year.
Compare the present worth's of the costs of these two alternatives using an interest of 10%.

Reference no: EM13189684

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