Financial Analysis Memo.

City of Evergreen Fire Department in Washington state. The Department operates 11 fire stations built to a single plan when the city passed a bond issue 30 years ago. The heating, ventilation, and air conditioning (HVAC) systems now need to be replaced. The city’s Facilities Department recommends buying systems made by Mega Energy (ME), which are made in China. These systems each cost $650,000 and each will cost about $95,000 to install. Annual maintenance costs are $24,000 per system in the first year of operation, and these costs are expected to increase by 3.5% per year. A major overhaul is needed every five years at an initial cost of $50,000 per system (this means the first overhaul occurs in year 6 of your analysis). The cost of these overhauls increases by 25% with each successive overhaul, which reflects both inflation and the need for more parts as the systems age. The systems use natural gas and expected fuel costs