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 $10,500 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 $1,950. A new power line will cost $17,500 to install, with power costs expected to be $950 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 of 15% per year, which alternative should be selected on the basis of a future worth analysis? The future worth of solar cells is $ and that of electric line is $ Electric line v should be selected on the basis of a future worth analysis.

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 $10,500 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 $1,950. A new power line will cost $17,500 to install, with power costs expected to be $950 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 of 15% per year, which alternative should be selected on the basis of a future worth analysis? The future worth of solar cells is $ and that of electric line is $ Electric line v should be selected on the basis of a future worth analysis.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 14P

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