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An enthusiastic cyclist is contemplating buying a new bicycle. She has narrowed her choice down to 2 possible contenders which differ in price. She anticipates

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An enthusiastic cyclist is contemplating buying a new bicycle. She has narrowed her choice down to 2 possible contenders which differ in price. She anticipates cycling an average of 16000 Km/year. The cheaper option A would cost 1200 while the more expensive option B would cost 1450. The more expensive option also benefits from greater durability of its components which would reduce the subsequent maintenance costs. The estimated maintenance costs over a 10-year period are as follows (table) based on end of year expenditures. Construct a cash flow diagram for each bicycle. Calculate the Present Worth of each option in a 10-year period and with a MARR of 5%, using the table for maintenance costs below. Costs of Option A Year Costs of Option B 1 80 70 2 80 70 wo 80 70 4 280 86 5 80 70 6 80 70 7 80 70 8 280 86 9 80 70 10 80 70

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