Question

Engineering Economic Analysis. Please do out, not excel.

9-13. Use the PW method to select the better of the following alternatives: Annual Expenses Alternative A Alternative B Defender: Challenger: Labor Material insurance and S300,000 S250,000 250,000 4% of initial 100.000 None property taxes capital investment Maintenance Leasing cost $8,000 None None $100,000 Assume that the defender was installed five years ago. The MARR is 10% per year. (97) Definition of alternatives: A: Retain an already owned machine (defender) in service for eight more years. B: Sell the defender and lease a new one (challenger) for eight years. Alternative A (additional information): Cost of defender five years ago $500,000 BV now S111,550 Estimated MV eight years from now S50,000 Present MV $150,000