Construction Materials & Procedures

Question 22 What is the present worth (PW) of the electric power option, assuming an interest rate of 12%? Please note that equipment in the electric power plant will need to be replaced only in the 3rd year. Electric Power Gas Power Construction Cost (initial cost) $2500 $3500 Life 6 years (structure) 3 years (equipment) 6 years Cost of replacing equipment at the end of 3 years $1000 0 Operating cost $900/year $700/year Salvage Value $350 $200