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Alpha software is considering replacing one of their computer servers with a newer model, the current model in question is now worth $1,200,000 (future market
Alpha software is considering replacing one of their computer servers with a newer model, the current model in question is now worth $1,200,000 (future market values is forecasted to drop by 20% per year). If kept the current server system will require an immediate overhaul that costs $200,000. The operation cost of this server is $170,000 for the first year and will increase by 33% afterwards. A new server model is available which has a 10 years of service life, costs $2,500,000 with O&M costs of $120,000 for the 1st year which increases by 32% for subsequent years. The new server's (challengers) market value will drop 25% per year through its service life. Knowing that the company's MARR is 10% A] Plot total AE cost (uniform annual equivalent cost) vs useful life for the defender as well as the challenger up to 10 years. B) Find the economic lives of the defender & the challenger. CDetermine if/when the defender should be replaced within 10 years. Alpha software is considering replacing one of their computer servers with a newer model, the current model in question is now worth $1,200,000 (future market values is forecasted to drop by 20% per year). If kept the current server system will require an immediate overhaul that costs $200,000. The operation cost of this server is $170,000 for the first year and will increase by 33% afterwards. A new server model is available which has a 10 years of service life, costs $2,500,000 with O&M costs of $120,000 for the 1st year which increases by 32% for subsequent years. The new server's (challengers) market value will drop 25% per year through its service life. Knowing that the company's MARR is 10% A] Plot total AE cost (uniform annual equivalent cost) vs useful life for the defender as well as the challenger up to 10 years. B) Find the economic lives of the defender & the challenger. CDetermine if/when the defender should be replaced within 10 years
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