Consider the two air conditioning systems detailed below.

	SYSTEM 1	SYSTEM 2
First cost	$10,000	$17,000
Annual Operating Cost	200	150
Salvage Value	100	300
New compressor and motor cost at midlife	1,750	3,000
Life, in years	8	12

a) Use annual equivalent analysis to determine the sensitivity of the economic decision to MARR values of 8%, 10%, 12%, and 15%.

b) If MARR is 10%, plot the annual equivalent values for each system for life values from 4 to 8 for System 1, and 6 to 12 for System 2. Assume the salvage values and annual operating costs are the same for each life value. Further, assume that the compressor is replaced at mid-life. Plot annual equivalent values for even-numbered years only. Which system do you prefer?