A large textile company is trying to decide among three options for a process. The costs associated with these alternatives are shown below. Alternative Y will need an upgrade of $9700 at the end of year 2. At the end of year 2, alternative Z would be replaced with another alternative Z having the same installed and operating costs. The selected option is expected to be in use for a long period of time. The MARR is 14% per year, compounded daily. (Algebraic signs matter.)

Option	X	Y	Z
First Cost, $	68500	48500	33500
AOC, $/yr.	6000	4000	5500
Overhaul in year 2		9700
MV (N), $	33250	28250	15750
Useful Life, N, yrs.	8	4	2

Use the above information to answer the following:

a. True/False, AW is the easiest method to calculate the EW of the best economic choice.

(Click to select) True False

b. True/False, AW can be used as the EW metric without any underlying assumptions.

(Click to select) True False

c. The AW of X is:

dollars per year

d. The AW of Y is:

dollars per year

e. The AW of Z is:

dollars per year

f. Based on parts c, d and e, which option is most economical?

multiple choice

Y

Z

None of the Above

X

g. What is the capital recovery, CR required for option Y? (An overhaul is a capital expense.)

dollars per year

h. The MV (8) for option X would have to be what amount such that owners are indifferent between options Z and X? (Indifference with respect of EW.)

dollars