two flight guidance systems are being evaluated for a backup control tower at a
ID: 2496369 • Letter: T
Question
two flight guidance systems are being evaluated for a backup control tower at a local airport. one system utilizes conventional radar , and the second uses a global positioning system (Gps). the life of b oth systems si 6 years and the marr is 12% per year . based on the internal rate of return criterion, which guidance system would you recommend?(6.4
Note- Please i need details work please
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radar Gps capital investment $300,000 $450,000 Annual expenses 60,000 30,000 salvage value 40,000 80,000Explanation / Answer
Given that radar and GPS perform almost the same task and both have a useful life of 6 years, the aim is to minimize EUAC.
Radar
EUAC = 300,000(A/P, 12%, 6) + 60,000 - 40000(A/F, 12%, 6)
= 300,000(0.2432) + 60,000 – 40000(0.1232)
=72,960 + 60,000 – 4,928
=$128,032
GPS
EUAC = 450,000(A/P, 12%, 6) + 30,000 - 80000(A/F, 12%, 6)
= 450,000(0.2432) + 30,000 - 80000(0.1232)
=109,440 + 30,000 – 9,856
=$129,584
To minimize EUAC, select Radar
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