Question 1 A civil engineering company is interested to buy an equipment, which will improve the production capacity. Following three options are available at an interest rate of 10% per year. On the bases of the annual worth calculation, determine which equipment will be economically most suitable. No need to estimate the capital recovery, just perform a normal annual worth comparison. First cost, $ Annual Operating cost, $ Salvage Value, $ Life, years Solution: Equipment A Equipment A Equipment C 37500 225000 0 23750 15000 35000 6250 75000 4 6 2