Two mutually exclusive electrostatic precipitators (ESP) are being considered as additions to the environmental protection equipment at a power generating company. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows:

a. Which electrostatic precipitator alternative should be selected? The firm's MARR is 20% per year. Assume the equipment will be needed indefinitely.
b. Assume the study period shortened to five years. The market value of ESP B after 5 years is estimated to be $40,000. Which alternative would you recommend?

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ESP A ESP B Annual expenses Market value at the Capital investment 50,000 $75,000 $6,000 $4,000 $12,000 $10,000 end of useful life Useful life 5 years 10 years