An environmental engineer must recommend one of two methods for monitoring high colony counts of E. coli and other bacteria in watershed area “hot spots.” Estimates are tabulated, and the MARR is 10% per year.
Cash flows
Method A
Method B

Initial cost, birr
-100,000
-250,000

Annual M&O, birr /year
-30,000 in year 1 increasing by 5000 each year
-20,000

Life, Years
3
6


(a)Use present worth analysis to select the better method.
(b) For a study period of 3 years, use PW analysis to select the better method.