5.41 An electric utility is taking bids on the purchase, installation, and operation of mi- crowave towers. Following are some details associated with the two bids that were received: Cost per Tower...


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5.41 An electric utility is taking bids on the purchase, installation, and operation of mi-<br>crowave towers. Following are some details associated with the two bids that were<br>received:<br>Cost per Tower<br>Bid A<br>Bid B<br>Equipment cost<br>$112,000<br>$98,000<br>Installation cost<br>$25,000<br>$30,000<br>Annual maintenance<br>and inspection fee<br>$2,000<br>$2,500<br>Annual extra income taxes<br>$800<br>Life<br>40 years<br>35 years<br>Salvage value<br>$O<br>$0<br>Which is the most economical bid if the interest rate is considered to be 11%? Ei-<br>ther tower will have no salvage value after 20 years of use.<br>Use the NPW method to compare these two mutually exclusive plans.<br>

Extracted text: 5.41 An electric utility is taking bids on the purchase, installation, and operation of mi- crowave towers. Following are some details associated with the two bids that were received: Cost per Tower Bid A Bid B Equipment cost $112,000 $98,000 Installation cost $25,000 $30,000 Annual maintenance and inspection fee $2,000 $2,500 Annual extra income taxes $800 Life 40 years 35 years Salvage value $O $0 Which is the most economical bid if the interest rate is considered to be 11%? Ei- ther tower will have no salvage value after 20 years of use. Use the NPW method to compare these two mutually exclusive plans.

Jun 04, 2022
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