Refer to Problem 6-2. Solve this problem using the ERR method. Let = 10% per year. Data

Refer to Problem 6-2. Solve this problem using the ERR method. Let ˆˆ = 10% per year.

Data from Problem 6-2:

The Consolidated Oil Company must install antipollution equipment in a new refinery to meet federal clean-air standards. Four design alternatives are being considered, which will have capital investment and annual operating expenses as shown below. Assuming a useful life of 8 years for each design, no market value, a desired MARR of 10% per year, determine which design should be selected on the basis of the PW method. Confirm your selection by using the FW and AW methods. Which rule (Section 6.2.2) applies? Why?

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Design Capital Investment Annual Expenses D1 $780,000 728,000 $600,000 D2 1,240,000 1,600,000 D3 574,000 D4