The City of Hamilton operates a power plant on the Ohio River. The city uses some of this generated electricity to service Hamilton residents and sells the excess electricity to PJM Interconnection, manager of a wholesale electricity market serving nearby states. The city council is evaluating two alternative proposals:

Proposal A calls for replacing the generators used in the plant with more efficient generators that will produce more electricity and have lower operating costs. The salvage value of the old generators is higher than their removal cost.

Proposal B calls for raising the level of the dam to retain more water for generating power and increasing the force of water flowing through the dam. This will significantly increase the amount of electricity generated by the plant. Operating costs will not be affected.

Required
Presented are a number of cost and revenue items. Indicate in the appropriate columns whether each item is relevant or irrelevant to proposals A and B.

		Proposal A	Proposal B
1.	Cost of new furniture for the city manager's office	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
2.	Cost of old generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
3.	Cost of new generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
4.	Operating cost of old generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
5.	Operating cost of new generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
6.	The police chief's salary	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
7.	Depreciation on old generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
8.	Salvage value of old generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
9.	Removal cost of old generators	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
10.	Cost of raising dam	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
11.	Maintenance costs of water plant	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant
12.	Revenues from sale of electricity	AnswerIrrelevantRelevant	AnswerIrrelevantRelevant

Answer rating: 100% (QA)

Proposal A Cost of new furniture for the city managers office Irrelevant Cost of old generators Rele... View the full answer