An electric utility is taking bids on the purchase, installation, and operation of microwave towers. Table P5.52
Question:
Which is the most economical bid if the interest rate is considered to be 11%? Either tower will have no salvage value after 20 years of use Use the NPW method to compare these two mutually exclusive plans
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Cost per Tower Bid A S112,000 $25,000 Bid B $98.000 $30.000 Equipment cost Installation cost Annual maintenance and inspection fee $2.000 $2,500 Annual extra income taxes Life Salvage value $800 35 years $0 40 years $0
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