A remotely located air sampling station can be powered by solar cells or by runn

Question

A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $14,000 to install and will have a useful life of 4 years with no salvage value. Annual costs for inspection, cleaning, etc. are expected to be $1,450. A new power line will cost $12,500 to install, with power costs expected to be $1,150 per year. Since the air sampling project will end in 4 years, the salvage value of the line is considered to be zero. At an interest rate of 13% per year, which alternative should be selected on the basis of a future worth analysis? The future worth of solar cells is $ and that of electric line is (Click to select) 3 should be selected on the basis of a future worth analysis

Explanation / Answer

Alternative-Solar Cell Year Cash outflows FVF @13% Future Values 0 -14000 1.630474 -22826.6 1 -1450 1.442897 -2092.2 2 -1450 1.2769 -1851.51 3 -1450 1.13 -1638.5 4 -1450 1 -1450 Future value of Solar cell -29859 Alternative-Power Line Year Cash outflows FVF @13% Future Values 0 -12500 1.630474 -20380.9 1 -1150 1.442897 -1659.33 2 -1150 1.2769 -1468.44 3 -1150 1.13 -1299.5 4 -1150 1 -1150 Future Value of Power line -25958 The Future worth of Solar cell is ($29859) The Future worth of Power line is ($25958)

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