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A company wants to build a spare parts storage facility. A plant engineer has identified three different location options. The initial cost of earthwork and
A company wants to build a spare parts storage facility. A plant engineer has identified three different location options. The initial cost of earthwork and prefab building and the annual net cash flow estimates are detailed in the following table. The annual net cash flow series vary due to differences in maintenance, labor costs, transportation charges, ete. The MARR is 10\%. Table 1: Cash flow estimates for the potential locations 1. Represent the cash flow for all three options? 2. Use the estimates made to perform an annual worth (AW) evaluation for each option. What is the best option that you recommend? 3. What is the rate of return for each option? Justify your answer. 4. Determine which option should be selected if you are using the rate of return analysis? Justify your answer. 5. If the life duration of the study changes from 30 years to infinite. Will your recommendation change if you compare it with your answer in question 2? Justify your answer. A company wants to build a spare parts storage facility. A plant engineer has identified three different location options. The initial cost of earthwork and prefab building and the annual net cash flow estimates are detailed in the following table. The annual net cash flow series vary due to differences in maintenance, labor costs, transportation charges, ete. The MARR is 10\%. Table 1: Cash flow estimates for the potential locations 1. Represent the cash flow for all three options? 2. Use the estimates made to perform an annual worth (AW) evaluation for each option. What is the best option that you recommend? 3. What is the rate of return for each option? Justify your answer. 4. Determine which option should be selected if you are using the rate of return analysis? Justify your answer. 5. If the life duration of the study changes from 30 years to infinite. Will your recommendation change if you compare it with your answer in question 2? Justify your
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