Homework Answers
MARR = 8%
Using Excel for Economic life analysis
| Year | Discount factor | O&M cost | PV (O&M) | Cumulative (O&M) | Cumulative (O&M) + Initial Cost | (A/P,8%,n) | EUAC |
| A | B | C | D=C*B | E | F=E+10500 | J | K = F*J |
| 1 | 0.92593 | 0.00 | 0.00 | 0.00 | 10500.00 | 1.08000 | 11340.00 |
| 2 | 0.85734 | 0.00 | 0.00 | 0.00 | 10500.00 | 0.56077 | 5888.08 |
| 3 | 0.79383 | 0.00 | 0.00 | 0.00 | 10500.00 | 0.38803 | 4074.35 |
| 4 | 0.73503 | 2300.00 | 1690.57 | 1690.57 | 12190.57 | 0.30192 | 3680.59 |
| 5 | 0.68058 | 2300.00 | 1565.34 | 3255.91 | 13755.91 | 0.25046 | 3445.26 |
| 6 | 0.63017 | 4300.00 | 2709.73 | 5965.64 | 16465.64 | 0.21632 | 3561.77 |
| 7 | 0.58349 | 7300.00 | 4259.48 | 10225.12 | 20725.12 | 0.19207 | 3980.72 |
| 8 | 0.54027 | 10300.00 | 5564.77 | 15789.89 | 26289.89 | 0.17401 | 4574.83 |
| 9 | 0.50025 | 13300.00 | 6653.31 | 22443.20 | 32943.20 | 0.16008 | 5273.54 |
| Discount factor | 1/(1+0.08)^n | ||||||
| (A/P,i,n) | i((1 + i)^n)/((1 + i)^n-1) | ||||||
As EUAC is lowest at 3445.26 at yr 5, Economic service life = 5 yrs
Showing formula in excel
| Year | Discount factor | O&M cost | PV (O&M) | Cumulative (O&M) | Cumulative (O&M) + Initial Cost | (A/P,8%,n) | EUAC |
| A | B | C | D=C*B | E | F=E+10500 | J | K = F*J |
| 1 | =1/(1.08)^N4 | 0 | =P4*O4 | =Q4 | =10500+R4 | =0.08*((1 + 0.08)^N4)/((1 + 0.08)^N4-1) | =S4*T4 |
| 2 | =1/(1.08)^N5 | 0 | =P5*O5 | =R4+Q5 | =10500+R5 | =0.08*((1 + 0.08)^N5)/((1 + 0.08)^N5-1) | =S5*T5 |
| 3 | =1/(1.08)^N6 | 0 | =P6*O6 | =R5+Q6 | =10500+R6 | =0.08*((1 + 0.08)^N6)/((1 + 0.08)^N6-1) | =S6*T6 |
| 4 | =1/(1.08)^N7 | 2300 | =P7*O7 | =R6+Q7 | =10500+R7 | =0.08*((1 + 0.08)^N7)/((1 + 0.08)^N7-1) | =S7*T7 |
| 5 | =1/(1.08)^N8 | 2300 | =P8*O8 | =R7+Q8 | =10500+R8 | =0.08*((1 + 0.08)^N8)/((1 + 0.08)^N8-1) | =S8*T8 |
| 6 | =1/(1.08)^N9 | 4300 | =P9*O9 | =R8+Q9 | =10500+R9 | =0.08*((1 + 0.08)^N9)/((1 + 0.08)^N9-1) | =S9*T9 |
| 7 | =1/(1.08)^N10 | =P9+3000 | =P10*O10 | =R9+Q10 | =10500+R10 | =0.08*((1 + 0.08)^N10)/((1 + 0.08)^N10-1) | =S10*T10 |
| 8 | =1/(1.08)^N11 | =P10+3000 | =P11*O11 | =R10+Q11 | =10500+R11 | =0.08*((1 + 0.08)^N11)/((1 + 0.08)^N11-1) | =S11*T11 |
| 9 | =1/(1.08)^N12 | =P11+3000 | =P12*O12 | =R11+Q12 | =10500+R12 | =0.08*((1 + 0.08)^N12)/((1 + 0.08)^N12-1) | =S12*T12 |
| Discount factor | 1/(1+0.08)^n | ||||||
| (A/P,i,n) | i((1 + i)^n)/((1 + i)^n-1) | ||||||
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