An airport is looking for some devices to support the luggage transportation services. There are 4 alternatives available (D1, D2, D3 and D4). To assist the evaluations, their purchase costs, service lives, possible salvages at the end of lives have been collected in Table Q2. In addition, the monthly variable costs of using these devices to perform the luggage transportation services in particular, and the numbers of corresponding devices needed are also provided in Table Q2. Given that the internal rate of return is set to 0.8% per month in that case.

1. (a) What are the Present Values of the end of life salvages (per unit) from these 4 devices? (4 marks)

2. (b) Determine the Capital Recovery Factors for the calculations of the monthly equivalent fixed costs (per unit) of the 4 devices. (4 marks)

3. (c) What are the fixed costs (per unit) in a monthly basis of the 4 devices? (4 marks)

4. (d) Prioritize the preference of choosing these 4 devices based on the cost minimization purpose and order them in the format of A > B > ..., where A is better than B and so on.

   (8 marks)

5. (e) What is the total monthly cost of the most preferred choice for providing the luggage

transportation services?

(5 marks)

Rubrics and Marking:

Table Q2

Device	D1	D2	D3	D4
Purchase Cost ($/unit)	38000	18000	35000	12000
Service Life (years)	5	7	8	4
End of Life Salvage ($/unit)	2500	2000	3200	3000
No. of Devices Required (units)	1	2	1	3
Variable Cost Required ($/month/unit)	450	220	380	150