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8. A manufacturing company is considering the installation of a heat exchanger to reduce energy consumption. Two options have been put forth and are
8. A manufacturing company is considering the installation of a heat exchanger to reduce energy consumption. Two options have been put forth and are being evaluated. Options A and B each have a life of 10 years and have zero estimated salvage value. Assuming the minimum attractive rate of return, before taxes, is 4%. Option A B Initial Cost to Install Annual Operating Costs $1,800 $1,766 $3,000 $3,800 Assuming both heat exchangers being considered provide similar warranties, performance, and life. Just based on the cash flows, which option you would recommend? Select an appropriate method to evaluate and compre these options, do the calculations, and clearly state your recommendation and why you chose it.
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