If you could write out the equation once for me to see where the values should go, that would be helpful. Thank you! Problem 2: You have been asked to compare the two quotes for a security system that will surround a remote power distribution substation. The received quotes provide the expected lifespan of both systems, but based on weather conditions at the substation, your company plans to trade out the entire security system every 7 years. Compare the two alternatives using annual worth analysis and an interest rate of 10% per year.| | Secquer System | Protekt System ||------------------------|----------------|----------------|| **First cost, $** | -25,000 | -33,000 || **Annual O&M, $** | -9,000 | -6,500 || **Salvage Value, $** | 3,000 | 5,000 || **Life, years** | 15 | 20 |

Annual value method is the expected value of a machine throughout the year. It is the total rent on the property, and it is assumed that the labor will pay the amount of repair if any maintenance is required.The formula for annual worth is given by:Where:P is the present worth (first cost) of the alternative,S is the salvage value of the alternative,(A/P,i,n) is the annual worth factor,O is the annual operating and maintenance cost of the alternative,i is the interest rate, andn is the planning horizon.For the Secquer System:For the Protekt System:Now, let's calculate these values:Now, use the annual worth factor for (A/P,i,n) to calculate these values:Now, calculate these values:As the AW of protekt system is higher than Secquer system, Alternative (protekt system) is the best. Protekt system is the best alternative.

Business

Economics

Problem 2. You have been asked to compare the two quotes for a security system that will surround a remote power distribution substation. The received quotes provide the expected lifespan of the both systems, but based upon weather conditions at the substation your company plans to trade out the entire security system every 7 years. Compare the two alternatives using annual worth analysis and an interest rate of 10% per year. First cost, $ Annual O&M, $ Salvage Value, $ Life, years Secquer System -25,000 -9,000 3000 15 Protekt System -33,000 -6,500 5,000 20

Problem 2. You have been asked to compare the two quotes for a security system that will surround a remote power distribution substation. The received quotes provide the expected lifespan of the both systems, but based upon weather conditions at the substation your company plans to trade out the entire security system every 7 years. Compare the two alternatives using annual worth analysis and an interest rate of 10% per year. First cost, $ Annual O&M, $ Salvage Value, $ Life, years Secquer System -25,000 -9,000 3000 15 Protekt System -33,000 -6,500 5,000 20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

If you could write out the equation once for me to see where the values should go, that would be helpful. Thank you!

Problem 2: You have been asked to compare the two quotes for a security system that will surround a remote power distribution substation. The received quotes provide the expected lifespan of both systems, but based on weather conditions at the substation, your company plans to trade out the entire security system every 7 years. Compare the two alternatives using annual worth analysis and an interest rate of 10% per year.

| | Secquer System | Protekt System |
|------------------------|----------------|----------------|
| **First cost, $** | -25,000 | -33,000 |
| **Annual O&M, $** | -9,000 | -6,500 |
| **Salvage Value, $** | 3,000 | 5,000 |
| **Life, years** | 15 | 20 |

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