A 10-year-old backup power system is being considered for early replacement. Its current market value is $16,000. Estimated future market values (MV) and annual operating costs (AOC) for the next 5 years are given in the following table. What is the economic service life of this defender if the interest rate is Z% per year using AW analysis?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A 10-year-old backup power system is being considered for early replacement. Its
current market value is $16,000. Estimated future market values (MV) and annual
operating costs (AOC) for the next 5 years are given in the following table. What is
the economic service life of this defender if the interest rate is Z% per year using
AW analysis?
Year
MV
AOC
1
10000
-5000
8000
-6500
6000
-8000
4
2000
-9500
-12500
[Hint: the value of Z = |last digit of your unique id+2nd digit of your unique id],
Example: if your id is 201-021-651 then Z = |1+2| = 3.00%, so, interest rate will be
3.00%)
3.
Transcribed Image Text:A 10-year-old backup power system is being considered for early replacement. Its current market value is $16,000. Estimated future market values (MV) and annual operating costs (AOC) for the next 5 years are given in the following table. What is the economic service life of this defender if the interest rate is Z% per year using AW analysis? Year MV AOC 1 10000 -5000 8000 -6500 6000 -8000 4 2000 -9500 -12500 [Hint: the value of Z = |last digit of your unique id+2nd digit of your unique id], Example: if your id is 201-021-651 then Z = |1+2| = 3.00%, so, interest rate will be 3.00%) 3.
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