04.02-PR014 Video Solution Video Solution Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $40,000. It has an expected life of 7 years at which time its salvage value will be $7,500. Operating and maintenance expenses are estimated to be $2,000 per year. If the filtration system is not purchased, Aerotron Electronies will have to pay Bay City $12.000 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow half of the purchase price, but they cannot start i ng the laun for 2 years. The bank has agreed to three couala l payments, with the first payment due at the end of year 2. The loan interest rate is 8% compounded annually Acrotron Electronics' MARR is 10% compounded annually 3. What is the present worth of this investment? > Answer b. What is the decision rule for judging the attractiveness of investments based on present worth? Anw c. Should Aerotron Electronics buy the water filtration system? > Answer - (Use MARR as 12%)