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(b) Birmingham Steel Corporation is considering to build a remotely located air sampling station which can be powered by solar cells, or by running an
(b) Birmingham Steel Corporation is considering to build a remotely located air sampling station which can be powered by solar cells, or by running an above ground electric line to the site and using conventional power. Solar cells will cost RM16,600 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection, cleaning, etc., are expected to be RM2400. A new power line will cost RM 31,000 to install, with power costs expected to be RM1000 per year. Since the air sampling project will end in 5 years, the salvage value of the line is considered to be zero. At an interest rate of 10% per year, i. Discuss which alternative should be selected by applying an annual worth analysis. (10 marks) ii. Calculate the first cost of the above ground line to make the two alternatives equally attractive economically, (10 marks)
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