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Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being implementation in

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Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being implementation in a developing country. Doing nothing is not an option. The MARR is 8% per year. Answer the following questions: a. Calculate the net AW of each system over the service life. b. Calculate the modified B/C ratio for each of the two systems. c. Use the B/C ratio method to determine which system is more economical. Initial Capital Annual Revenues Annual Costs System 1 System 2 $160,000 $260,000 $55,000 $84,000 $25,000 $43,000 Service life (years) 12 12 Salvage value $19,200 $57,200

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