Question

4. 125 points] For the cash flows below, use a capitalised cost method to alternative is best at MARR value of 10% per year. to determine which Alternative 1 Alternative 2 First Cost, S -250000 -160000 Maintenance and Operation Cost S/year 3000 -15000 Cost Every 6 years,S -1000 Cost Every 15 yearss -12000 Salvage Value,S 10000 50000 ife, years 12

Answer 1

Both a tenatives have ffevent iFe Life of altevnet: 1 = 12 year) Life of alternative 2 we need to macth life for thee 2 altenetiv e need to repeat altevnative 1 infinitely we need to calculat capitaliset cost af both a lternatives

fer/2 year Capitalised cost of artenetive 1 (o)t/year m go Prejent wnt h of =-( Firt cost + tpw of peri odic 」t even 6yean t f Saluase value' Present worth, 了2 Capitalised Cot For arte rnot, ve 4 when Yepeated in finitely 2 4 to A 1 2. A CI 12.

t qooo ( P/F, 10 y 12) Frum compounding inteve ratc tobles (C/A , lo%,12) 6,8,4 = 0 . 5645 6) ( P/F, '0%, =

fp alter n ctive totoy Capita l ; &ed in cost 268リ391 Capi talised Cosf fer Asternetive 2 I S

I ) I S C11' As Capi talised coJt of alternetive 2 lower than apitaised Cof f alfevnative altevnative