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Site license or 50 desktop licenses? Option A is to pay $12,000 for a 3-year site license usable by up to 50 students at any one time. The annual support fee is $2000 per year, but the company gives back $2000 toward a new site license every 3 years. Alternatively, Option B is to buy 50 individual software packages (desktop licenses) for $200 each including free support for up to 2 years. You will replace all 50 desktop licenses every 2 years. Assuming the repeatability of each option, which option has the least uniform annual cost EUAC (AW method)? Assume the MARR = 12 %. Initial cost Annual cost Salvage value Number of years until repeated Site License $12,000 $2,000 $2,000 3 years Desktop Licenses $10,000 $0 $0 2 years

Site license or 50 desktop licenses? Option A is to pay $12,000 for a 3-year site license usable by up to 50 students at any one time. The annual support fee is $2000 per year, but the company gives back $2000 toward a new site license every 3 years. Alternatively, Option B is to buy 50 individual software packages (desktop licenses) for $200 each including free support for up to 2 years. You will replace all 50 desktop licenses every 2 years. Assuming the repeatability of each option, which option has the least uniform annual cost EUAC (AW method)? Assume the MARR = 12 %. Initial cost Annual cost Salvage value Number of years until repeated Site License $12,000 $2,000 $2,000 3 years Desktop Licenses $10,000 $0 $0 2 years

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Do not use excel please. Show equations used.

Notes: Every MARR is given as an effective annual rate unless stated otherwise. Show each rate of return as a percentage with 2 decimal places such as 6.37%. You may round off all PW, AW, or FW values to the nearest dollar.
Transcribed Image Text:Notes: Every MARR is given as an effective annual rate unless stated otherwise. Show each rate of return as a percentage with 2 decimal places such as 6.37%. You may round off all PW, AW, or FW values to the nearest dollar.
Site license or 50 desktop licenses? Option A is to pay $12,000 for a 3-year site license usable by up to 50 students at any one time. The annual support fee is $2000 per year, but the company gives back $2000 toward a new site license every 3 years. Alternatively, Option B is to buy 50 individual software packages (desktop licenses) for $200 each including free support for up to 2 years. You will replace all 50 desktop licenses every 2 years. Assuming the repeatability of each option, which option has the least uniform annual cost EUAC (AW method)? Assume the MARR = 12 %. Initial cost Annual cost Salvage value Number of years until repeated Site License $12,000 $2,000 $2,000 3 years Desktop Licenses $10,000 $0 $0 2 years
Transcribed Image Text:Site license or 50 desktop licenses? Option A is to pay $12,000 for a 3-year site license usable by up to 50 students at any one time. The annual support fee is $2000 per year, but the company gives back $2000 toward a new site license every 3 years. Alternatively, Option B is to buy 50 individual software packages (desktop licenses) for $200 each including free support for up to 2 years. You will replace all 50 desktop licenses every 2 years. Assuming the repeatability of each option, which option has the least uniform annual cost EUAC (AW method)? Assume the MARR = 12 %. Initial cost Annual cost Salvage value Number of years until repeated Site License $12,000 $2,000 $2,000 3 years Desktop Licenses $10,000 $0 $0 2 years
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