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Q1. The Consolidated Oil Company must install antipollution equipment in a new refinery to meet federal clean-air standards.

 Four design alternatives are being considered, which will have capital investment and annual operating expenses as shown below. 

Assuming a useful life of 8 years for each design, no market value, a desired MARR of 10% per year, determine which design should be selected on the basis of the PW method.

 Confirm your selection by using the FW and AW methods.


 


Design                        Capital Investment                            Annual Expenses


D1                               $600,000                                                        $780,000


D2                               760,000                                                          728,000


D3                               1,240,000                                                       630,000


D4                               1,600,000                                                       574,000


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