Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is

7% per year.

Answer the following questions:

a. Calculate the net AW of each system over the service life.

b.Calculate the modified B/C ratio for each of the two systems.

c. Use the B/C ratio method to determine which system is more economical.

Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is 7% per year Answer the ollowing questions: a. Calculate the net AW of each system over the service life. b. Calculate the modified B/C ratio for each of the two systems. c. Use the B/C ratio method to determine which system is more economical. Initial Capital Annual Revenues Annual Costs Service life (years) Salvage value System 1 System 2 $140,000 $250,000 $54,000 $83,000 $21,000 $45,000 12 $16,800 21.6% 12 $55,000 12.0% a. The net AW of System 1 is S (Round to the nearest dollar) The net AW of System 2 is S(Round to the nearest dollar.) b. The modified B/C ratio for System 1isRound to two decimal places.) The modified B/C ratio for System 2 is L . (Round to two decimal places.) e. The incremental B/C ratio is(Round to two decimal places.) Therefore, System is more economical than System Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is 7% per year Answer the ollowing questions: a. Calculate the net AW of each system over the service life. b. Calculate the modified B/C ratio for each of the two systems. c. Use the B/C ratio method to determine which system is more economical. Initial Capital Annual Revenues Annual Costs Service life (years) Salvage value System 1 System 2 $140,000 $250,000 $54,000 $83,000 $21,000 $45,000 12 $16,800 21.6% 12 $55,000 12.0% a. The net AW of System 1 is S (Round to the nearest dollar) The net AW of System 2 is S(Round to the nearest dollar.) b. The modified B/C ratio for System 1isRound to two decimal places.) The modified B/C ratio for System 2 is L . (Round to two decimal places.) e. The incremental B/C ratio is(Round to two decimal places.) Therefore, System is more economical than System