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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
An electric utility is taking bids on the purchase, installation, and operation of microwave towers. Following are some details associated with the two bids that were received:
                                                       Cost per Tower Bid ABid BEquipment cost$112,000$98,000Installation cost$25,000$30,000Annual maintenance  and inspection fee$2,000$2,500Annual extra income taxes $800Life40 years35 yearsSalvage value$0$0
Which is the most economical bid if the interest rate is considered to be 11%? Either tower will have no salvage value after 20 years of use.
Use the NPW method to compare these two mutually exclusive plans.
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