Tectonic Plating Inc. is considering a new five – year engineering system that requires an initial fixed asset investment of $113,000, and it will save an estimated 330,000 kilowatt-hours (kWh) of electric power each year over a five-year period.

Kilowatt-hour electricity costs $0.10, and the company uses a minimum attractive rate of return (MARR) of 20% per year in its economic evaluations of renewed systems. The market value of the system will be$40,000 at the end of five years, and additional annual operating and maintenance expenses are negligible. Should this system be installed base on NPV method?

Answer rating: 100% (QA)

Cash inflow PV of annual CF 201650000 x PVAF205 16... View the full answer