ONE QUESTION, Part 2 of 3 of a multi-part question. From textbook Fundamentals o
ID: 2737085 • Letter: O
Question
ONE QUESTION, Part 2 of 3 of a multi-part question. From textbook Fundamentals of Engineering Economic Analysis, 5th edition, chapter 4. Problem 26. Please do not use Excel, show work using formulas and calculations. Please show cash flow diagrams, and feel free to ask me any follow up questions. Due in approximately 12 hours.
Two storage structure, given code names Y and Z, are being considered for a military base. The military uses a 5 percent/year expected rate of return and a 24-year life for decisions of this type. The relevant characteristics for each structure are shown below:
PART B: What is the decision rule for determining the preferred machine based on present worth ranking?
Structure Y Structure Z First Cost $4500 $1000 Estimated Life 12 years 24 years Est. Salvage Value None $1800 Annual Maintenance Cost $1000 $720Explanation / Answer
Decision rule is Net Present Value method for determining the preferred machine.
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