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A large textile company is trying to decide among three options for a process. The costs associated with these alternatives are shown below. Alternative
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 First Cost, $ 68500 6000 AOC, $/yr. Overhaul in year 2 MV (N), $ Useful Life, N, yrs. (Click to select) c. The AW of X is: dollars per year 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. d. The AW of Y is: dollars per year b. True/False, AW can be used as the EW metric without any underlying assumptions. (Click to select) e. The AW of Z is: OX OZ 33250 8 dollars per year f. Based on parts c, d and e, which option is most economical? None of the Above Y 48500 4000 9700 Y 28250 4 Z 33500 5500 dollars 15750 2 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.)
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