You are considering switching from an existing component in a renewable energy system to a new component. Electrical use and capital cost data for the two components are shown below. Power used by the component (Watts) Useful life of component (hours) Capital cost for component ($) Interest Rate (%) Inflation Rate (%) Cost of Electricity ($ per kilowatt-hr) Number of hours component is used per year For each component calculate the following: Capital Costs New a) Present cost (S) Hint: New Component: Lasts 7 years, so is only purchased once at time n=0. 1500 7,000 4000 7.00 2.90 0.09 You are to complete a present cost analysis to compare the two components. 1,000 Hint: Existing Component: Is purchased every year for n = 7 years, so this is an annual cost Acopexisting Existing Electricity Costs b) Calculate the annual electricity cost ($) c) Convert these annual electricity costs to present costs ($). d) Find the total present cost in $ (capital + electricity) e) Which component would you purchase and briefly, why? New 6500 1,000 250 7.00 2.90 0.09 1,000 Existing

You are considering switching from an existing component in a renewable energy system to a new component. Electrical use and capital cost data for the two components are shown below. You are to complete a present cost analysis to compare the two components. For each component calculate the following You are considering switching from an existing component in a renewable energy system to a new component. Electrical use and capital cost data for the two components are shown below. You are to complete a present cost analysis to compare the two components. For each component calculate the following