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 fl ows.
• 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
New filtration systems for commercial airliners are available that use an electric field to remove upto 99.9% of infectious diseases and pollutants from aircraft air. This is vitally important, as manyof the flu germs, viruses, and other contagious diseases are transmitted through the systems thatrecirculate aircraft air many times per hour. Investments in the new filtration equipment can costfrom $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 aninternational 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 ivalues for incremental cash fl ows.• Estimate the breakeven ROR values from both graphs, and use this estimate to select onealternative.Air Cleanser(Filter 1)Purely Heaven(Filter 2)Initial cost per aircraft, $ 1000 1500Estimated savings, $ per year 375 700 in year 1, decreasing by100 per year thereafterEstimated life, years 5 5
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