Question

Two methods can be used to produce solar panels for electric power generation. Method 1 will...

Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $580,000, an AOC of $150,000 per year, and $170,000 salvage value after its 3-year life. Method 2 will cost $850,000 with an AOC of $170,000 and a $240,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 29% higher after three years than it is after five years. If the MARR is 9% per year, which method should the company select?

The company should select (Click to select) Metho1 or Method 2.

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Answer #1

The given data are executed in excel.

Method 2 should be selected by the company because it has less negative present worth -$828423.01

The excel calculation are given below:

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