Cl ure I https://newconnect.mheducation.com/flow/connect.html Ch5,67 A remotely
ID: 2541716 • Letter: C
Question
Cl ure I https://newconnect.mheducation.com/flow/connect.html Ch5,67 A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $16,000 to install and will have a useful life of 4 years with no salvage value. Annual costs for inspection, cleaning, etc. are expected to be $800. A new power line will cost $6.000 to install, with power costs expected to be $500 per year Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest rate of8% per year, which alternative should be selected on the basis of a future worth analysis? and that of electric line is $ TOlicktoseleen1 should be selected on the basis of a future worth analysis. to 40,30Next >Explanation / Answer
Alternative-Solar Cells Year Cash outflows FVF @ 8% Future values 0 -16000 1.360489 -21767.8 1 -800 1.259712 -1007.77 2 -800 1.1664 -933.12 3 -800 1.08 -864 4 -800 1 -800 Future worth -25373 Alternative-Electric Lines Year Cash outflows FVF @ 8% Future values 0 -6000 1.360489 -8162.93 1 -500 1.259712 -629.856 2 -500 1.1664 -583.2 3 -500 1.08 -540 4 -500 1 -500 Future worth -10416 Hence, Alternative-Electric lines shall be selected. Future worth of Solar cells $(25373) and that of Electric lines $(10416)