An industrial coal-fired boiler for process steam is equipped with a 10-year-old electrostatic precipitator (ESP). Changes in coal quality have caused stack emissions to be in noncompliance with federal standards for particulates. Two mutually exclusive alternatives have been proposed to rectify this problem (doing nothing is not an option).

The life of both alternatives is 9 years, the effective income tax rate is 26%, and the after-tax MARR is 7% per year. Both alternatives qualify as seven-year MACRS (GDS) properties. Make a recommendation regarding which alternative to select based on an after-tax analysis.

New Baghouse New ESP $1,147,500 $1,005,500 73,800 Capital investment Annual operating expenses 118,500 GDS Recovery Rates ( Year7-year Property Class 0.1429 0.2449 0.1749 0.1249 0.0893 0.0892 0.0893 0.0446 4 Discrete Compounding; i-7% Single Payment Uniform Series Sinking Compound Amount Compound Amount Factor To Find F Given A Capital Recovery Factor To Find A Given P AIP 1.0700 0.5531 0.3811 0.2952 0.2439 0.2098 0.1856 0.1675 0.1535 0.1424 0.1334 0.1259 0.1197 Present Present Worth Factor To Find P Given A Factor Worth Factor Factor To Find A Given F To FindF Given FP To Find P Given F 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 2.1049 2.2522 2.4098 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 0.4751 0.4440 0.4150 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 15.7836 17.8885 20.1406 0.9346 1.8080 2.6243 3.3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 7.4987 7.9427 8.3577 1.0000 0.4831 0.3111 0.2252 0.1739 0.1398 0.1156 0.0975 0.0835 0.0724 0.0634 0.0559 0.0497 6