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6. (5 pts) As Engineering Economist, you want to apply your new skills to conduct an analysis on whether to use Metal or Shin

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Answer #1

FW of Metal Roof = -350 *(F/P,10%,6) - 60*(F/A,10%,6)

= -350 *(1 + 0.1)^6 - 60*((1 + 0.1)^6-1)/0.1

= -350 *(1.1)^6 - 60*((1.1)^6-1)/0.1

= -350 *1.771561 - 60*7.715610

= -1082.98 ~ -1083

Shingled roof will be reinvested at EOY3

FW of Shingled Roof = -200 *(F/P,10%,6) - 70*(F/A,10%,6) - 200*(F/P,10%,3)

= -200 *(1 + 0.1)^6 - 70*((1 + 0.1)^6-1)/0.1 - 200*(1 + 0.1)^3

= -200 *(1.1)^6 - 70*((1.1)^6-1)/0.1 - 200*(1.1)^3

= -200 *1.771561 - 70*7.715610 - 200 *1.331

= -1160.60 ~ -1161

As Future cost of metal roof is less, it should be selected

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