Question
Two methods can be used for producing solar pan-els for electric power generation. Method l will have an initial cost of $550,000, an AOC of
Two methods can be used for producing solar pan-els for electric power generation. Method l will have an initial cost of $550,000, an AOC of $160,000 per year, and $125,000 salvage value after its 3-year life. Method 2 will cost $830,000 with an AOC of $120,000, and a $240,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a 3-year planning period. You estimate the salvage value of method 2 will be 35% higher after 3 years than it is after 5 years. If the MARR is 10% per year, which method should the company select? Be sure to included the cash flow diagram. Can i please get help with this problem, thank you!
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