A) Given the same real MARR of 4%, determine the maximum allowable inflation rate for Process A to still be feasible. In the space below, explain your solution process and show your calculations using factor notation (for example (i.e.: (P/A, i, N)).

B) The City of Mubai has applied a real MARR of 4% on similar past projects. Assuming the same rate can be applied here, calculate the minimum feasible salvage value for each of the options. Consider the inflation rate will remain the same as over the last five years, when CPI rose from 124.6 to 136.5. In the space below, show your calculations using factor notation (i.e. (P/A, i, N)).

Process A Process B First Cost $500,000 $800,000 Salvage $66,000 $80,000 Annual Savings $40,000 $70,000 Maintenance $3000 every 3 years $1000 occurs every other year, starting the first year and increases by $500 each time Service Life 20 16