Rerform an EAC analysis and evaluate what decision to make regarding 2 challengers and 1 defender. Elaborate:a) Graphsb) EAC analysisc) Conclude the exercise and make a decision regarding the results Machine N1 (#1 challenger) useful life = 8 years Initial Cost $15,000 MARR 18%YearOperating costsMarket value EAC1$ 355.00$ 8,000.00 2$ 500.00$ 7,000.00 3$ 788.00$ 6,000.00 4$ 1,000.00$ 5,000.00 5$ 1,355.00$ 4,000.00 6$ 1,688.00$ 3,000.00 7$ 2,012.00$ 1,000.00 8$ 2,345.00$ 0.00 Year12W|N3st4сл6Machine N2 (#2 challenger)useful life = 6 yearsInitial Cost $18,000OperatingcostsMarketvalue60.00 $12,000.0077.00 $ 7,500.00$1,000.00 $ 3,800.00$1,200.00 $ 2,400.00$ 1,600.00 $ 400.00$ 30,000.00 $$$Machine V (Defender)useful life = 8 yearsInitial Cost $18,000Market valueInitial Cost $25,000Current Market Value: $13,000.00OperatingYearcosts12345MARR 18%$ 813.00 $$ 950.00 $$ 1,100.00 $$ 1,500.00 $$ 1,800.00 $10,000.008,000.006,000.004,000.00EACSeniority: 2 yearsMARR 18%EAC Year12345678Machine N1 (#1 challenger)useful life = 8 yearsInitial Cost $15,000Operatingcosts355.00 $500.00 $788.00 $$$$$ 1,000.00 $$ 1,355.00 $$ 1,688.00 $$ 2,012.00 $$ 2,345.00 $Market value8,000.007,000.006,000.005,000.004,000.003,000.001,000.00MARR 18%EAC

EAC (Equivalent annual Cost ) refers to a constant annual cost of a project given its future cash…

Answered: Rerform an EAC analysis and evaluate…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Problem 1QTC

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Rerform an EAC analysis and evaluate what decision to make regarding 2 challengers and 1 defender. Elaborate:
a) Graphs
b) EAC analysis
c) Conclude the exercise and make a decision regarding the results

		Machine N1 (#1 challenger)
		useful life = 8 years
		Initial Cost $15,000	MARR 18%
Year	Operating costs	Market value	EAC
1	$ 355.00	$ 8,000.00
2	$ 500.00	$ 7,000.00
3	$ 788.00	$ 6,000.00
4	$ 1,000.00	$ 5,000.00
5	$ 1,355.00	$ 4,000.00
6	$ 1,688.00	$ 3,000.00
7	$ 2,012.00	$ 1,000.00
8	$ 2,345.00	$ 0.00

Year
1
2
W|N
3
st
4
сл
6
Machine N2 (#2 challenger)
useful life = 6 years
Initial Cost $18,000
Operating
costs
Market
value
60.00 $12,000.00
77.00 $ 7,500.00
$
1,000.00 $ 3,800.00
$
1,200.00 $ 2,400.00
$ 1,600.00 $ 400.00
$ 30,000.00 $
$
$
Machine V (Defender)
useful life = 8 years
Initial Cost $18,000
Market value
Initial Cost $25,000
Current Market Value: $13,000.00
Operating
Year
costs
1
2
3
4
5
MARR 18%
$ 813.00 $
$ 950.00 $
$ 1,100.00 $
$ 1,500.00 $
$ 1,800.00 $
10,000.00
8,000.00
6,000.00
4,000.00
EAC
Seniority: 2 years
MARR 18%
EAC

Year
1
2
3
4
5
6
7
8
Machine N1 (#1 challenger)
useful life = 8 years
Initial Cost $15,000
Operating
costs
355.00 $
500.00 $
788.00 $
$
$
$
$ 1,000.00 $
$ 1,355.00 $
$ 1,688.00 $
$ 2,012.00 $
$ 2,345.00 $
Market value
8,000.00
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
1,000.00
MARR 18%
EAC

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