This is from the book basics of engineering economy by blank 2nd edition. plase

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This is from the book basics of engineering economy by blank 2nd edition. plase show work

Amcric11n Electric Power agreed to spend $4.6 billion to clean up 46 coal4 fired power plants that are believed to be contributing to acid rain. The-plan is to reduce nitrogen oxide emissions by 69% by 2016 and sulfur dioxide- emissions by 79% by 2018. Assume Plan A is to spend $0.575 billion per year in years I through 4 and an additional $0.575 billion per year in years 7 through 10. Plan B is to spend $0.46 billion in each of years 1 through 10. At an interest rate of 8% per year, which plan is more economical to the company based on a present worth analysis?

Explanation / Answer

Present worth of Plan A = 0.575/1.08 + 0.575/1.08^2 + 0.575/1.08^3 + 0.575/1.08^4 + 0.575/1.08^7 + 0.575/1.08^8 + 0.575/1.08^9 + 0.575/1.08^10 = $3.10 billion

Present worth of Plan B = 0.46/1.08 + 0.46/1.08^2 + 0.46/1.08^3 + 0.46/1.08^4 + 0.46/1.08^5 + 0.46/1.08^6 + 0.46/1.08^7 + 0.46/1.08^8 + 0.46/1.08^9 + 0.46/1.08^10 = 3.09 billion

Plan B is more economical

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