Question
A plant engineer is choosing between two types of solar water heating systems with the following costs and revenues. The engineer must choose one of
A plant engineer is choosing between two types of solar water heating systems with the following costs and revenues. The engineer must choose one of the two models. The firm's MARR is 12%. What is the IRR of the system that the engineer should choose? Enter your answer as a percentage between 0 and 100. Caution: the system with the larger IRR might not be the system that should be chosen! For Model 1: Initial investment $12,000 Annual savings $2,200 Annual maintenance $240 Salvage value $800 Project life (years) 13 For Model 2: Initial investment $6,600 Annual savings $1,500 Annual maintenance $100 Salvage value $500 Project life (years) 13
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