Problem 1 [45 points] Consider two plans A and B with the details shown in the table below. Take a 5% discount rate. 15 10 Plan A Plan B Investment cost (SR) 900 1100 Operational cost (SR/yr) 35 50 Maintenance cost (SR/yr) 10 Revenue (SR/yr) 92 130 Salvage value (SR) 270 450 Life time (yr) 15 a. Based on the net present worth method, which plan is preferred? Explain. b. Based on the annual (levelized) cost method, which plan is preferred? Explain. C. Due to technological advancements, the annual operational cost of the more expensive plan can be reduced. By how much should that operational cost drop in order to make both plans equally acceptable? Problem 2 [20 points] Consider plan A given in the table below. Take a 5% discount rate. Find the simple payback period of this plan. Plan A 900 35 10 Investment cost (SR) Operational cost (SR/yr) Maintenance cost (SR/yr) Revenue (SR/yr) Salvage value (SR) Life time (yr) 140 270 15