Question 1 ABC Company would like to invest in a new electrical switching system if the payback period is less than 5 years. Two types of electrical switching System X and Y are being evaluated. The initial investment cost and maintenance cost for System X are $2,500,000 and $250,000 respectively while the initial investment cost and maintenance cost for System Y are $1,700,000 and $200,000 respectively. The estimated energy cost savings for System X and System Y are 550,000 kWh per year and 450,000kWh per year respectively. a) Assuming the electric tariff is $1.25 per kWh. What are the payback periods of System X and System Y? (Hint: Yearly cost saving = energy cost saving - (14%) maintenance cost). b) Which system would you suggest ABC Company to adopt? (2%) c) If the cost of capiral is 14% and assuming the system life is 5 years, would you suggest ABC Company to adopt the system in (b)? (9%)