Case 1: An engineering company is considering the purchase of one of two computer systems. System 1 is based on small. Decentralized personal computers and has an initial cost of BD100,000. These will be replaced in five (5) years at a cost of BD100,000. The salvage value is BD10,000 at the end of years 5 and 10. It is estimated that the benefits for the first five (5) years will be BD30,000 per year, and the second five (5) years, is BD60,000. System 2 is based on a larger, more powerful work stations and has an initial cost of BD500,000. The replacement will occur at the end of year ten (10), where the salvage value is BD5,000. The amount of benefits is estimated to be BD90,000 per year over the ten (10) years period. The company uses a 10% interest rate. Which system should the company purchase? Case 2 For the 2 cases, solve the following and present the solution in structured manner a. Payback period b. Profitability index c. Internal Rate of Return e. Depreciation schedules (use one method only) f. PW, AW, or FW Analysis (use one method only) An engineer must choose between two pumps for use in a water distribution system. Both pump A and pump B will deliver water at an adequate flow rate and pressure head. The data for the two pumps are given below: Item Initial Cost (BD) Operating Cost per year (BD) Lifetime (years) Salvage Value (BD) Pump A 200,000 30,000 12 10,000 Pump B 300,000 23,000 12 60,000 If the interest rate is charge at 7%: a) which pump are you going to choose? b) If the lifetime of pump B is changed to 16 years, and the analysis period is 48 years, which pump is better