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Question 1 Two alternatives for an off-grid energy system are being evaluated by an individual building a cabin in the Northern lI'Jntario wildemess {From Providers

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Question 1 Two alternatives for an off-grid energy system are being evaluated by an individual building a cabin in the Northern lI'Jntario wildemess {From Providers A and E}. Alternative A. is a solar energy system that has a life of 3 years, a rst cost of $18,0, annual energy cost savings {can be treated as revenue in this cash ow} of , and a salvage value after 8 years of $90M. Alternative B is a wind energy system that has a life of 12 years, with an initial cost of $21,5, annual energy cost savings of $32M, and a salvage value after 12 years of $9D-. MARE. is T%, and altematives are replicable in the future. Using an appropriate method of analysis, choose the better alternative. Show calculation steps leading to this choice and provide explanations whenever possible. Question 2 You are a water lter manufacturer trying to decide if you should invest in an automatic or manually operated machinery. Both alternatives\" present costs are pegged at $5-D, however, they lead to different revenue patterns thereafter. The automatic machine allows for higher production levels and thus more revenues immediately, however more energy costs over time than the manual machine means that net revenues diminish over time. The manual machine does not produce as many lters initially but has no energy cost, so its net revenues increase over time. The expected net revenues of the automatic machine are: $320!), $ 1 Still, $691], and $310 by the ends of years one to four, respectively. The expected net revenues for the manual machine are $281], $7M}, $19M, and $3 by the ends of years one to four, respectively. 1. Calculate the Internal Rate of Retum of each alternative and compare them. Do you think it is possible to decide based on individual [RR comparisons? If so, 1Which is more feasible? 2. Knowing the MARK is 8%, use NPW analysis to compare these alternatives and find out which one is better. 3. Calculate the benet cost ratio of the both alternatives

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