Determine the present worth index of incremental investment

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A mechanical engineer must recommend an A/C system to a commercial building owner. The owner intends to own the building for at least 10 years. A conventional split system has a design life of 10 years, a cost of $55,000, and annual operating costs of $14,000. A chilled water system has a design life of 10 years, an initial cost of $60,000, and annual operating costs of $12,000. Using a rate of return of 9%, determine the present worth index of the incremental investment up to the chilled water system. Express your answer to two decimal places.

Reference no: EM131094659

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