1. An consultant has received two bids for an elevator to be installed in a new building. The bids, plus his evaluation of the elevators, are as follows in Table 1. If the interest rate is 15%, using the present worth method, which bid should be accepted? Alternative Bid Consultant's evaluation Service life Annual (year) Salvage value operating cost 10 RM 2,500 RM 3,300 15 RM 2,650 RM4,800 Company A Company B RM 35,000 RM 44,000 Table 1 2. A consulting company has been engaged to advise a new city how best to proceed with the construction of a 18,000 km water supply reservoir. Since only 10.000 km of storage will be required for the next 25 years, an alternative to building the full capacity now is to build the reservoir in two stages. Initially, the reservoir could be built with 10.000 km of capacity and then, after 25 years, the additional of 8,000 km of capacity could be added by increasing the height of the reservoir. Estimated costs are as follows in Table 2. If the interest rate is at 6%, which construction plan is preferred? Construction cost Annual maintenance cost RM 13,000,000 RM 50,000 Information Build in two stages - First stage: 10.000 km3 Second stage: additional 8,000 km3 of capacity, additional construction cost and maintenance cost Build full capacity now RM 11,000,000 RM 20,000 RM 22,000,000 RM 70,000 Table 2 3. A university lab is a research contractor to NASA for in-space fuel cell systems that are hydrogen and methanol-based. During lab research, three equal-service machines need to be evaluated economically. Perform the present worth analysis with the costs shown below. The MARR is 10% per year. First cost, RM Annual operating cost (AOC), RMyear Salvage value , RM Life, years Electric powered -4000 -800 300 6 Gas- Powered 3200 -650 450 6 Solar- powered -5000 -100 100 6