Without using excel You are charged with choosing a vendor to produce a new software that is going to benefityour company. The project has a life cycle of 10 years and MARR of 9% annual interest.Part a.) Draw the cash flow diagram for each vendor.Part b.) Calculate an AW cost for each vendor.Part c.) Indicate which vendor you would choose.TaskVendor ACost, $Development 200,000150,000ProgrammingOperationSupport55,00020,00040,00030,000TimeFrameNowYears 1-4NowYears 2-6Years 2-10Years 1-10Vendor BCost, $80,00070,00045,00050,00035,000Time FrameNowNowYears 1-6Years 2-10Years 1-10Vendor CCost, $ Time Frame160,000Years 1-10

Annual worth is the equivalent uniform annual cost or benefit associated with a project over its…

Answered: You are charged with choosing a vendor…

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 10 years and MARR of 9% annual interest.

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

Without using excel

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 10 years and MARR of 9% annual interest.
Part a.) Draw the cash flow diagram for each vendor.
Part b.) Calculate an AW cost for each vendor.
Part c.) Indicate which vendor you would choose.
Task
Vendor A
Cost, $
Development 200,000
150,000
Programming
Operation
Support
55,000
20,000
40,000
30,000
Time
Frame
Now
Years 1-4
Now
Years 2-6
Years 2-10
Years 1-10
Vendor B
Cost, $
80,000
70,000
45,000
50,000
35,000
Time Frame
Now
Now
Years 1-6
Years 2-10
Years 1-10
Vendor C
Cost, $ Time Frame
160,000
Years 1-10

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