Economic evaluations of refurbished systems

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Reference no: EM131603136

A refurbished heating system is being considered for a small office building. The system can be purchased and installed for $200,000, and it will save an estimated $70,000 per year in year-zero dollars that will increase with the general inflation rate of 5 % per year beer a six-year period. The market value of the system will be $15,000 at the end of six years, and the market interest rate (i_m) is 20 % over this period. The company MARR is 18 % per year in its economic evaluations of refurbished systems. Determine the benefit-cost (B-C) ratio based on present worth for this project.

Reference no: EM131603136

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