A remotely located air sampling station can be powered by solar cells or by running an above
Question:
A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the site and using conventional power. Solar cells will cost $16,600 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection, cleaning, etc., are expected to be $2400. A new power line will cost $31,000 to install, with power costs expected to be $1000 per year. Since the air sampling project will end in 5 years, the salvage value of the line is considered to be zero. At an interest rate of 10% per year,
(a) Which alternative should be selected on the basis of an annual worth analysis
(b) What must be the first cost of the above ground line to make the two alternatives equally attractive economically?
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Step by Step Answer:
a AW Solar 16600AP 10 5 2400 16600026380 2400 6779 per year AW ...View the full answer
