4. A housewife is looking at ways of producing domestic hot water and considers two possibilities-an electrical immersion heater having an installation cost of Rs 160 and estimated annual electrical charges of Rs 200, and a gas boiler with an installation cost of Rs 760 with annual fuel bills of Rs 80.

Assuming yourself as a consultant to this cost-conscious housewife, advise her suitably by comparing the two systems, on the basis of (i) total expenditure, and (ii) present value, over a 5 years period. Take interest at 9%.

What will be your recommendation if you consider both the equipments for a 8-year period?

(CA, May, 1993)