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You were put in charge to set up a computing center for your company and you...

You were put in charge to set up a computing center for your company and you have to determine what will be the annual equivalent cost of running the center. You have to purchase four engineering workstations at a price of $45,000 each, with an expected salvage value of $2,000 each at the end of a service life of five years. The annual operating and maintenance costs per workstation are $25,000. The company's MARR is 12%.

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Answer #1

Cost of 4 workstations = 45000 each

MARR=12%

Salvage value = 2000 each

O&M cost = 25000 each

N=5 years

Capital recovery cost:

180000-8000(A/P,12%,5)+8000(12%)

172000(0.27741) + 960

47714.52+960

=48674.52

Annual operating cost = 4*25000=100000

Annual equivalent cost = 100000+48674.52 = 148674.52.

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