Question
Problem 4 (10 points): A remotely located air sampling station can be powered by solar cells or by running an electric line to the site
Problem 4 (10 points): A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $14,000 to install and will have a useful life of 4 years with no salvage value. Annual costs for inspection, cleaning, etc. are expected to be $1,450. A new power line will cost $12,500 to install, with power costs expected to be $1,150 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest rate of 13% per year, which alternative should be selected on the basis of a future worth analysis? Hint: What is the formula used for future worth analysis? Solution:
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