Potable water is in short supply in many countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in China. Doing nothing is not an option. Refer to the data below and state your key assumptions in working this problem.

a. Use the PW method to determine which system should be selected when MARR = 8% per year.

b. Which system should be selected when MARR = 15% per year?

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System 1 System 2 Capital investment Annual revenues $100,000 $150,000 70,000 50,000 Annual expenses MV at end of useful life 22,000 20,000 40,000 Useful life 10 years 5 years 16.5% IRR 15.1%