Determine the system should be installed

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For each of the following problems, (a) draw the cash flow diagram (as needed); (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box.

1. A new air conditioning system is to be installed in an office building. Purchasing and installing the system costs $100,000 and the company expects to save $50,000 every year on electricity bills. The company's MARR is 10% per year, maintenance costs are worked out to be $10,000 per year and the system's market value will be $20,000 at the end of 10 years. Use the AW method to determine whether the system should be installed.

Reference no: EM133084324

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