11. (40 points) You are considering buying a new piece of equipment to be used by the maintenance crew of your new production plant. You have narrowed down the alternatives to two. Both altematives are assumed to generate the same level of output Details of these two altematives are provided in the following table. Assume that each altenative will be available with same cash flows after its service life is over. The MARR of the company is 10%| Alternative 1 Alternative 2 Inifial Investment Annual operation $12,000 maintenance $70,000 $85,000 $8,000 and cost Warranty covers repair expenses Warranty covers repair expenses for one year. ie., first repair cost for two years. (i.e., first repair cost occurs at the end of year 2) First repair cost to pay after First repair cost to pay after warranty expires $1,500 Repair cost increases by $500 in Repair cost increases by $300 in the following years. $30,000 4 years Repair cost occurs at the end of year 3) warranty expires $1,200 the following years. $35,000 6 years Salvage Value Service Life a) Using Present Worth Analysis method, determine which altenative is the most economical option b) Using Equivalent Uniform Annual Cost (EUAC) Analysis method, determine which alternative is the most economical option. 11. (40 points) You are considering buying a new piece of equipment to be used by the maintenance crew of your new production plant. You have narrowed down the alternatives to two. Both altematives are assumed to generate the same level of output Details of these two altematives are provided in the following table. Assume that each altenative will be available with same cash flows after its service life is over. The MARR of the company is 10%| Alternative 1 Alternative 2 Inifial Investment Annual operation $12,000 maintenance $70,000 $85,000 $8,000 and cost Warranty covers repair expenses Warranty covers repair expenses for one year. ie., first repair cost for two years. (i.e., first repair cost occurs at the end of year 2) First repair cost to pay after First repair cost to pay after warranty expires $1,500 Repair cost increases by $500 in Repair cost increases by $300 in the following years. $30,000 4 years Repair cost occurs at the end of year 3) warranty expires $1,200 the following years. $35,000 6 years Salvage Value Service Life a) Using Present Worth Analysis method, determine which altenative is the most economical option b) Using Equivalent Uniform Annual Cost (EUAC) Analysis method, determine which alternative is the most economical option