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Estimate the breakeven ror values from both graphs

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Reference no: EM13881889

New filtration systems for commercial airliners are available that use an electric field to remove up to 99.9% of infectious diseases and pollutants from aircraft air. This is vitally important, as many of the flu germs, viruses, and other contagious diseases are transmitted through the systems that recirculate aircraft air many times per hour. Investments in the new filtration equipment can cost from $100,000 to $150,000 per aircraft, but savings in fuel, customer complaints, legal actions, etc., can also be sizable. Use the estimates below (in $100 units) from two suppliers provided to an international carrier to do the following, using a spreadsheet and an MARR of 15% per year.

• Plot two graphs: PW versus i values for both alternatives' cash flows and PW versus _i values for incremental cash flows.

• Estimate the breakeven ROR values from both graphs, and use this estimate to select one alternative.

 

Air Cleanser (Filter 1)

Purely Heaven (Filter 2)

Initial cost per aircraft, $

-1000

-1500

Estimated savings, $ per year

375

700 in year 1, decreasing by 100 per year thereafter

Estimated life, years

5

5

Reference no: EM13881889

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