systems, Inc., afford to spend now on an energy management system if the softwar
ID: 2590525 • Letter: S
Question
systems, Inc., afford to spend now on an energy management system if the software will save the company $21,300 per year for the next 5 years? Use an interest rate year. of 10% per a. $ 80,744 b. $ 78,744 c. $ 87,744 d. S 77,844 2. If a company invests $25,000 in new packaging equipment, by how much must it reduce its annual if it expects to recover the investment in seven years at an interest rate of 10% per year? a. $64,842 b. $5,135 c. $9,828 d. $4,583 3. In a conventional B/C ratio a. Disbenefits and M&O; costs are subtracted from benefits. b. Disbenefits are subtracted from benefits, and M&O; costs are added to costs. c. Disbenefits and M&O; costs are added to d. Disbenefits are added to costs, and M&O; costs. costs are subtracted from benefits. 4. In evaluating three mutually exclusive alternatives by the B/C method, the alternatives were ranked in terms of increasing total equivalent cost (A, B, and C, respectively), and the following results were obtained for the project B/C ratios: 1.1,0.9, and 1.3. On the basis of these results, you should: a. Select A. b. Select C. c. Select A and C. d. Compare A and C incrementally © FETS: 20 1710-EGN4003-Mechanical and Mechatronics Engineering Page 4 of 27Explanation / Answer
1). Saving Per Year = $21300
No. of Year = 5 Year
Interest Rate = 10%
Amount Required for system = $21300 * 3.7908
= $80744
The Answer is "A"
2). Calculate How much must reduce its annual cost :-
Investement = $25000
Interest Rate = 10%
No. of Years = 7 years
Investement = Save per year * PV factor@10% for 7years
=> $25000 = Save per year * 4.8684
=> Save per year = $25000 / 4.8684
Save per year = $5135
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