What is the favorable annual equivalent costs

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Reference no: EM132042665

Question: 1. A community wants to create a park on some vacant property on the outskirts of the town (zoned commercial). They estimate the benefit to the community to be worth $1,500,000.00. Contractors have estimated a net cost to build the park and to rezone the property to be $2,300,00.00. Should they build the park?

2. ACME is investigating the need to replace a combined water filtration pump and motor set (defender) with a more efficient running one (challenger). The market price for the existing pump is $20,000.00, It's remaining useful life is 3 years where its salvage value is $5,000.00. The O&M costs are $4,000 per year.

The new pump/motor set costs $30,000.00 with a 3 year useful life and a $11,000.00 salvage value. It's O&M costs are $3,000.00 per year. The MARR for this company is 12%.

What is the favorable Annual Equivalent Costs between the two scenarios?

Reference no: EM132042665

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