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You are charged with choosing a vendor to produce a new software that is going to benefit your company. The project has a life cycle of 8 years and MARR of 8% annual interest. Part a.) Draw the cash flow diagram for each vendor. Part b.) Calculate a PW cost for each vendor. Part c.) Indicate which vendor you would choose. Task Vendor M Vendor N Vendor O Cost, $ Time Cost, $ Time Frame Cost, $ Time Frame Frame Development 200,000 Now 70,000 Now

You are charged with choosing a vendor to produce a new software that is going to benefit your company. The project has a life cycle of 8 years and MARR of 8% annual interest. Part a.) Draw the cash flow diagram for each vendor. Part b.) Calculate a PW cost for each vendor. Part c.) Indicate which vendor you would choose. Task Vendor M Vendor N Vendor O Cost, $ Time Cost, $ Time Frame Cost, $ Time Frame Frame Development 200,000 Now 70,000 Now

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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You are charged with choosing a vendor to produce a new software that is going to benefit your company. The project has a life cycle of 8 years and MARR of 8% annual interest. Part a.) Draw the cash flow diagram for each vendor. Part b.) Calculate a PW cost for each vendor. Part c.) Indicate which vendor you would choose. Task Vendor M Vendor N Vendor O Cost, $ Time Cost, $ Time Frame Cost, $ Time Frame Frame 200,000 150,000 42,000 20,000 40,000 30,000 Development Now 70,000 Now Years 1-4 Programming 60,000 45,000 50,000 35,000 Now Now Years 1-3 Years 1-5 Operation Support Years 1-8 Years 1-8 150,000 Years 1-8 Years 1-8 Years 1-8
Transcribed Image Text:You are charged with choosing a vendor to produce a new software that is going to benefit your company. The project has a life cycle of 8 years and MARR of 8% annual interest. Part a.) Draw the cash flow diagram for each vendor. Part b.) Calculate a PW cost for each vendor. Part c.) Indicate which vendor you would choose. Task Vendor M Vendor N Vendor O Cost, $ Time Cost, $ Time Frame Cost, $ Time Frame Frame 200,000 150,000 42,000 20,000 40,000 30,000 Development Now 70,000 Now Years 1-4 Programming 60,000 45,000 50,000 35,000 Now Now Years 1-3 Years 1-5 Operation Support Years 1-8 Years 1-8 150,000 Years 1-8 Years 1-8 Years 1-8
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