Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is 6%

per year.

Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is 6% per year. Use EXCEL to answer the following questions: a. Calculate the discounted payback period for each system, b Calculate the net AW of each system over the service life. c. Calculate the conventional B/C ratio of each of the two systems d. Use the B/C ratio method to determine the more economical system. Initial Capital Annual Revenues Annual Costs Service life (years) Salvage value System 1 $140,000 $53,000 $20,000 System 2 $250,000 $83,000 $40,000 11 11 $16,800 $55,000 a. The discounted payback period for System 1 is The discounted payback period for System 2 is years (Round to one decimal place.) years (Round to one decimal place.) b. The net AW of System 1 is $ The net AW of System 2 is $ (Round to the nearest dollar.) (Round to the nearest dollar.) c. The conventional B/C ratio for System 1 is The conventional B/C ratio for System 2 is - (Round to two decimal places.) (Round to two decimal places.) d. The incremental B/C ratio is (Round to two decimal places.) Therefore, System is more economical than System Potable water is in short supply in many developing countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is 6% per year. Use EXCEL to answer the following questions: a. Calculate the discounted payback period for each system, b Calculate the net AW of each system over the service life. c. Calculate the conventional B/C ratio of each of the two systems d. Use the B/C ratio method to determine the more economical system. Initial Capital Annual Revenues Annual Costs Service life (years) Salvage value System 1 $140,000 $53,000 $20,000 System 2 $250,000 $83,000 $40,000 11 11 $16,800 $55,000 a. The discounted payback period for System 1 is The discounted payback period for System 2 is years (Round to one decimal place.) years (Round to one decimal place.) b. The net AW of System 1 is $ The net AW of System 2 is $ (Round to the nearest dollar.) (Round to the nearest dollar.) c. The conventional B/C ratio for System 1 is The conventional B/C ratio for System 2 is - (Round to two decimal places.) (Round to two decimal places.) d. The incremental B/C ratio is (Round to two decimal places.) Therefore, System is more economical than System