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Potable water is in short supply in many developing countries. To address this need two...

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Finance

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Potable water is in short supply in many developing countries. To address this need two mutually exclusive water purification systems are being considered for implementation in a developing country. Doing nothing is not an option. The MARR is 7% per year Answer the following questions a. Calculate the net AW of each system over the service life b Calculate the modified B/C ratio for each of the two systems c. Use the B/C ratio method to determine which system is more economical System 1 System 2 Initial Capital $140,000 $250,000 Annual Revenues $59,000 $87,000 Annual Costs $25,000 $36.000 Service life (years) 12 12 Salvage value $16.800 $55,000 a. The net AW of System 1 is (Round to the nearest dollar) The net AW of System 2 is $_ (Round to the nearest dollar) Therefore, based on the AW method, System is more economical b. The modified B/C ratio for System 1 is (Round to two decimal places.) The modified B/C ratio for System 2 is (Round to two decimal places) c. The incremental B/C ratio is (Round to two decimal places.) Therefore, based on the B/C ratio method, System is more economical Note that the two methods should always result in the same recommendation

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