The city of Toronto is considering two types of green water filtration subsystems. Design A requires an initial investment of $500,000, with annual operating and maintenance costs of 10% of the investment for the next 15 years. Design B needs an investment of $250,000, with annual operating and maintenance costs of $75,000 per year for the next 15 years. Tax collections from Torontonians would be $85,000 per year. The interest rate is 6%, and no salvage value is associated with either system.

1. Using Present Worth Analysis, which system should be selected and why?
2. If a new design (design C), which requires an initial outlay of $350,000 and annual operating and maintenance costs of $65,000, is proposed, would your answer to (A) change?