There are two options for setting up a plant. One of these options will be preferred. Information about the options is given in the table on the right. According to this;
a) Using the Investment Cost Table, determine which option should be applied with the Annual Equivalent Cost method.

b) Calculate the present value of the investment cost for each option.

c) Using the Income Statement, determine which option should be applied using the Annual Equivalent Income method.

d) Determine which option should be applied using the Annual Equivalent Net Income method.

e) Prepare a table to find the payback period for the preferred option according to the Annual Equivalent Net Income method.

f) According to the Annual Equivalent Net Income method, find the period the investment for the preferred option.

Investment Amount Table Costs and Expenses Option A Option B Initial Investment Cost 1.285.000 928.000 Annual Operation and Maintenance Expenses 11.500 9.850 Annual Labor Expense 40.000 42.000 Additional Major Maintenance in Year 4 17.000 Additional Major Maintenance in 5th Year 15.000 Scrap Value 80.000 67.000 Economic life 10 8 Cost of Capital 18% 18% YEARS Annual Income B 1 95.000 75.000 2 100.000 130.000 3 160.000 120.000 4 350.000 250.000 5 380.000 375.000 6 370.000 335.000 7 125.000 125.000 185.000 180.000 9 205.000 10 150.000 2 4 INCOME STATEMENT 6 7 00