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.

Use EXCEL to answer the following questions:(SHOW FUNCTION)

a. Calculate the discounted payback period for each system.

bCalculate the net AW of each system over the service life.

c.Calculate the conventional B/C ratio of each of the two systems.

d. Use the B/C ratio method to determine the more economical system.

Initial Capital Annual Revenues Annual Costs Service life (years) Salvage value System 1 $150,000 $60,000 $20,000 10 $18,000 System 2 $250,000 $87,000 $45,000 10 $55,000 a. The discounted payback period for System 1 is The discounted payback period for System 2 is years (Round to one decimal place.) years (Round to one decimal place.) b. The net AW of System 1 is $ The net AW of System 2 is $ (Round to the nearest dollar.) (Round to the nearest dollar.) c. The conventional B/C ratio for System 1 is The conventional B/C ratio for System 2 is . (Round to two decimal places.) . (Round to two decimal places.) d. The incremental B/C ratio is Round to two decimal places.) Therefore, System is more economical than System . Initial Capital Annual Revenues Annual Costs Service life (years) Salvage value System 1 $150,000 $60,000 $20,000 10 $18,000 System 2 $250,000 $87,000 $45,000 10 $55,000 a. The discounted payback period for System 1 is The discounted payback period for System 2 is years (Round to one decimal place.) years (Round to one decimal place.) b. The net AW of System 1 is $ The net AW of System 2 is $ (Round to the nearest dollar.) (Round to the nearest dollar.) c. The conventional B/C ratio for System 1 is The conventional B/C ratio for System 2 is . (Round to two decimal places.) . (Round to two decimal places.) d. The incremental B/C ratio is Round to two decimal places.) Therefore, System is more economical than System