Problem:
The nonprofit Center for Original Oxygen (CO2) has decided to concentrate its efforts to a particular means of reducing carbon dioxide thereby enabling a return to the original proportion of oxygen in the environment. Several alternatives have been researched and the cost and benefits have been determined. They have determined that a good representative measure (surrogate) of benefits is the expected cost savings from lower expenditures on respiratory disease medical expenses. The next step is to evaluate alternative methods of reducing carbon dioxide and choose one to support. The data below has been gathered to assist in a choice. (Data are completely fictitious)
Perform a financial analysis for CO2 to determine which one should be chosen from a financial perspective.
Time span 10 years
MARR 7%
|
Investment |
Annual Gross Benefits |
Annual Cost of Operations |
| Electric Cars |
$80,000 |
$80,000 |
$50,000 |
| Home Fuel Cells |
$150,000 |
$100,000 |
$28,000 |
| Coal conversion |
$100,000 |
$70,000 |
$35,000 |
| Oil conversion |
$90,000 |
$80,000 |
$30,000 |
| CO2 capture and storage |
$120,000 |
$80,000 |
$46,000 |