An office building is needing to replace its refrigeration and cooling units. Two mutually exclusive alternatives for theoffice's building refrigeration and air conditioning needs are being investigated is 15% per year and the study period is18 years, which chilling system should be recommended? Their relevant costs and lives are summarized as follows:Absorption Chilling (AC) Compression Chilling (CC) Capital investment $60,000 $80,000 Annual operating expenses40,000 32,000 Salvage (market) value 10,000 0 Useful life 6 years 9 years If the hurdle rate (MARR) is 15% per year andthe study period is 18 years, which chilling system should be recommended?

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Answered: An office building is needing to…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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