The teachers' office area in the Antonio Lucchetti building has problems associated with the air conditioning system. Currently, the existing system is a centrifuge. The Department of Buildings and Land is evaluating two alternatives to address the situation.

The first alternative is to replace the 50-ton centrifuge, the handling system, and its isolation system.

The initial costs are as follows:

Units	Cost	Life usage
50-ton centrifuge	$33,000	15 years
handling system	$47,000	30 years
Installation work *	$1,400	n/a
Materials for initial installation **	$2,500	n/a
isolation system	$22,000	n/a

* It is reduced to 40% of the original cost in case of equipment replacement.

** The cost of materials for replacement is also assumed 40% of the original cost.

The maintenance of the centrifuge consists of:

Labor maintenance	Personal Requirements	Labor duration	Monthly salary	Cost
Cleaning every 6 months	1 technician 1 assistant	1 day	$1,550 $1,515
Annual water pump maintenance	1 technician 1 assistant	1/2 days	$1,550 $1,515
Annual visit of the manufacturer				$1,000
Reemplazo de abanicos cada tres aos	1 technician 1 assistant	1 hour	$1,550 $1,515	$150

Maintenance is carried out by personnel from the Refrigeration Workshop assigned to the Land Buildings and Grounds Department. The total hours that a regular employee works in the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (You have to calculate the cost associated with the time that the staff spends on the maintenance of this particular equipment.)

The additional costs associated with operating the centrifuge are as follows:

Cost item	frequency	Cost
Coldwater pipe insulation replacement	Every 6 years	$22,000

The costs associated with the electrical consumption of the centrifuge system are as follows:

The cost for daily electricity consumption of a 50-ton centrifuge is $ 150 per day. The cost for the electric consumption of the handler is $ 25 per day.

The centrifuge system operates continuously.

Assume that the system will operate for 260 business days annually. 1. Perform a present value analysis to select the best alternative

1. Perform a present value analysis to select the best alternative
2. The residual value of the equipment corresponds to the cost of disposing of the unit
3. Analyze a 30-year horizon
4. Consider an interest rate of 6%