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Home Insert Page Layout Formulas Data Review iew Acrobat 4a Copy Paste Format Painter K16 Q2. (20 pts) You are looking to purchase new pipe fittings for your plant. You have collected the following information from five different vendors. Assume that the fittings from all vendors last 10 years, after which they can be salvaged. Use an interest rate of 10%. Part 1: Use present worth analysis to select a vendor Part 2: Calculate and use the EUAWs to select a vendor. 1 Initial Cost Annual Maintenance Cost Annual Repair Cost Salvage Value 4 Ajax 5 Best Pipe 6 Central 19700 17000 2200 2300 1000 900 900 Denver Piping 8 Excelsior 1000 1100 300 19000 17

Explanation / Answer

Find the present equivalent cost and EUAC for all projects

Ajax => PE = -19700 - PV(10%,10,-3100) + PV(10%,10,0,-300) = 38632.50, EUAC = PMT(10%,10,-38632.50) = 6287.26

Best pipe => PE = -17000 - PV(10%,10,-3200) + PV(10%,10,0,-500) = 36469.84, EUAC = PMT(10%,10,-36469.84) = 5935.30

Central => PE =  -19000 - PV(10%,10,-1900) + PV(10%,10,0,-1000) = 30289.13, EUAC = PMT(10%,10,-30289.13) = 4929.42

Denver piping => PE = -19000 - PV(10%,10,-3200) + PV(10%,10,0,-1100) = 38238.52, EUAC = PMT(10%,10,-38238.52) = 6223.42

Excelsor =>, PE = -14000 - PV(10%,10,-2700) + PV(10%,10,0,-300) = 30474.67, EUAC = PMT(10%,10,-30474.67) = 4959.61

Analysis suggests that we must use the lowes EUAC or PE vendor which is Central

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