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Use the present value method to select the more cost-effective remediation from two options. Assume a discount rate of 7%. (Hint: When converting annual O&M
Use the present value method to select the more cost-effective remediation from two options. Assume a discount rate of 7%. (Hint: When converting annual O&M to present value, an alternative approach is to use tabulated value for the conversion, or use the for- mula P = A [((1 + i) 1)/i (1 + i)] to convert from annual O&M to the present value). = $500K, annual O&M = $15K, salvage value = $50K, life expec- Option 1: Capital cost tancy = 15 years. Option 2: Capital cost = $350K, annual O&M = $10K, equipment replacement $20K every 3 years, salvage value = $5K, life expectancy = 15 years
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