CASE STUDYANNUAL WORTH ANALYSIS THEN AND NOWBackground and InformationHarry, owner of an automobile battery distributorship inAtlanta, Georgia, performed an economic analysis 3 years agowhen he decided to place surge protectors in-line for all hismajor pieces of testing equipment. The estimates used and theannual worth analysis at MARR = 15% are summarized below.Two different manufacturers' protectors were compared.Cost and installation, $Annual maintenance cost,S per yearSalvage value, $Equipment repair savings. $Useful life, years.O12345678910AMARR=Year0123456711121314151617 AW element18Total AW89910PowrUp-26,000-8002,00025.000B15%Investmentand salvage-26,000......2,000-6,6426Lloyd's-36,000-300C3,00035.00010PowrUpAnnualmaintenance0-800-800-800-800-800-800-800DCase Study Exercises1. Plot a graph of the newly estimated maintenance costsand repair savings projections, assuming the protectorslast for seven more years.2. With these new estimates, what is the recalculated AWfor the Lloyd's protectors? Use the old first cost andchaMOThe spreadsheet XX is the one Harry used tomake the decision. Lloyd's was the clear choice duc to itssubstantially larger AW value. The Lloyd's protectors wereinstalled.During a quick review this last year (year 3 of operation),it was obvious that the maintenance costs and repair savingshave not followed (and will not follow) the estimates made3 years ago. In fact, the maintenance contract cost (which in-cludes quarterly inspection) is going from $300 to $1200 pcryear next year and will then increase 10% per year for the next10 years. Also, the repair savings for the last 3 years were$35,000, $32,000, and $28,000, as best as Harry can deter-mine. He believes savings will decrease by $2000 per yearhereafter. Finally, these 3-year-old protectors are worth noth-ing on the market now, so the salvage in 7 years is zero, not$3000.Repairsavings025,00025,00025,00025,00025,00025,00025,000$ 17,558XXXXXXXXXAnnual worth analysis of surge protector alternatives, case study.below-36,000000000000Lloyd'sInvestment Annualand salvage maintenance0-300-300-300-3003,000-7,025F-300-300-300-300-300-300-300GRepairsavings035,00035,00035,00035,00035,00035,00035,00035,00035,00035,00035,000$ 27,675maintenance cost estimates for the first 3 years. If theseestimates had been made 3 years ago, would Lloyd'sstill have been the economic choice?3. How has the capital recovery amount changed for theLloyd's protectors with these new estimates?

The annual worth is the discounted net of all the benefits and costs incurred over a one-year…

ANNUAL WORTH ANALYSIS THEN AND NOW Background and Information Harry, owner of an automobile battery distributorship in Atlanta, Georgia, performed an economic analysis 3 years ago when he decided to place surge protectors in-line for all his major pieces of testing equipment. The estimates used and the annual worth analysis at MARR = 15% are summarized below. Two different manufacturers' protectors were compared. Cost and installation, $ PowrUp -26,000 Lloyd's -36.000 below The spreadsheet XX is the one Harry u make the decision. Lloyd's was the clear choice du substantially larger AW value. The Lloyd's protecto installed. During a quick review this last year (year 3 of oper it was obvious that the maintenance costs and repair s have not followed (and will not follow) the estimates 3 years ago. In fact, the maintenance contract cost (wh cludes quarterly inspection) is going from $300 to $12 year next year and will then increase 10% per year for th 10

ANNUAL WORTH ANALYSIS THEN AND NOW Background and Information Harry, owner of an automobile battery distributorship in Atlanta, Georgia, performed an economic analysis 3 years ago when he decided to place surge protectors in-line for all his major pieces of testing equipment. The estimates used and the annual worth analysis at MARR = 15% are summarized below. Two different manufacturers' protectors were compared. Cost and installation, $ PowrUp -26,000 Lloyd's -36.000 below The spreadsheet XX is the one Harry u make the decision. Lloyd's was the clear choice du substantially larger AW value. The Lloyd's protecto installed. During a quick review this last year (year 3 of oper it was obvious that the maintenance costs and repair s have not followed (and will not follow) the estimates 3 years ago. In fact, the maintenance contract cost (wh cludes quarterly inspection) is going from $300 to $12 year next year and will then increase 10% per year for th 10

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Can some one please help me to answer each question correctly? please and thank you.
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5
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