Ryan has received cost and salvage value estimates for two competing fire sprinkler systems to be installed in his office building. System A has a first cost of $100,000, annual M&O costs of $10,000, and a $20,000 salvage value after 5 years. System B has a first cost of $175,000, M&O costs of $8,000, and a $40,000 salvage value after 10 years. (a) Plot the breakeven ROR point between the two systems using PW values for two situations: incremental cash flows and alternative cash flows. (Hint: Use Figure 8–6 as a model.) (b) State which system is economically preferred if the MARR is larger than this value.
 FIGURE 1.png)
(a) Graph of breakeven ROR is approximately 8.5% per year in both renditions.
(b) If MARR > approximately 8.5%, the lower-investment system A is selected.
 ANSWER.png)
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