Assignment #1+ Hand-Out Date: Oct, 1st, 2019 Due Date: Oct, 10th, 2019 (11:59 pm) Question 1 (5 points) Your company has been studying whether to purchase a new equipment or not, and has gathered the following information: Optimistic Most Likely Pessimistic Initial cost $100,000 $115,000 $125,000 Annual O&M cost $5,500 $6,000 $8,000 Net annual benefit $20,000 $18,000 $16,000 Salvage value $35,000 $32,000 $30,000 Given the useful life of the equipment is 10 years, and the MARR = 5%, using rate-of-return analysis to determine whether to purchase the equipment or not. Question 2 (5 points) Your company has been studying whether to purchase a new equipment or not, and has gathered the following information: Net annual $15,000 $12,000 $10,000 benefit Probability 0.2 0.5 0.3 0.3 Useful life 9 12 Probability 0.60 0.40 Given the cost of the equipment is $220,000, and the salvage value after 9 years is 30% of the initial cost, and the salvage value after 12 years is 20% of the initial cost. If the MARR = 4%, find out the expected net present worth of the equipment