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Consider this data with MARR = 10%. System A System B Initial Cost 65000 85000 Service Life yrs 5 9 Annual Revenue 19000 19000 1.
| Consider this data with MARR = 10%. | |||||||||
| System A | System B | ||||||||
| Initial Cost | 65000 | 85000 | |||||||
| Service Life yrs | 5 | 9 | |||||||
| Annual Revenue | 19000 | 19000 | |||||||
| 1. Why would AW (Annual Worth) be a convenient method here? | |||||||||
| 2. In order to use the AW approach there is something which must be planned for the future; what is it? | |||||||||
| 3. What is the AW of each for the given MARR? | |||||||||
| 4. Based on the result of 3 which is the better investment? | |||||||||
| 5. Determine if the internal rate of return for System A is higher than 15%. | |||||||||
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