Question

  

Alternative Comparison-Different Lives 5.17 Dexcon Technologies, Inc. is evaluating two alter- natives to produce its new plastic filament with tribological (i.e., low friction) properties for creat- ing custom bearings for 3-D printers. The esti- mates associated with each alternative are shown below. Using a MARR of 20 % per year, which al- ternative has the lower present worth? LS DDM Method -370,000 -164,000 First cost, $ -21,000 -55,000 M&O cost, $/year 30,000 0 Salvage value, $ 4 2 Life, years in a

can you solve it by using Excel

Answer 1

Analysis will be carried out for 4 yrs (LCM of 2 & 4)

Using NPV function in Excel

	DDM				LS
Year	Investment	Maint Cost	Salvage value	Net cash Flow	Investment	Maint Cost	Salvage value	Net cash Flow
0	-164000			-164000	-370000			-370000
1		-55000		-55000		-21000		-21000
2	-164000	-55000	0	-219000		-21000		-21000
3		-55000		-55000		-21000		-21000
4		-55000	0	-55000		-21000	30000	9000
NPW				-420269.3				-409895.8

As the net present cost of LS is lower, it should be selected

Showing formula in excel

	DDM				LS
Year	Investment	Maint Cost	Salvage value	Net cash Flow	Investment	Maint Cost	Salvage value	Net cash Flow
0	-164000			=P13+Q13+R13	-370000			=T13+U13+V13
1		-55000		=P14+Q14+R14		-21000		=T14+U14+V14
2	-164000	-55000	0	=P15+Q15+R15		-21000		=T15+U15+V15
3		-55000		=P16+Q16+R16		-21000		=T16+U16+V16
4		-55000	0	=P17+Q17+R17		-21000	30000	=T17+U17+V17
NPW				=NPV(20%,S14:S17)+S13				=NPV(20%,W14:W17)+W13