During a quick review this last year (year 3 of operation), it was obvious the maintenance costs and repair savings have not followed (and will not follow) the estimates made 3 years ago. In fact, the maintenance contract cost (which includes quarterly inspection) is going from $300 to $1200 per year next year and will then increase 10% per year for the next 10 years. Also, the repair savings for the last 3 years were $35,000, $32,000, and $28,000, as best as Harry can determine. He believes savings will decrease by $2000 per year hereafter. Finally, these 3-year-old protectors are worth nothing on the market now, so the salvage in 7 years is zero, not $3000.

Case Study Exercises:

Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for 7 more years.

With these new estimates, what is the recalculated AW for the Lloyds protectors? Use the old first cost and maintenance cost estimates for the first 3 years. If these estimates had been made 3 years ago, would Lloyds still have been the economic choice?

How has the capital recovery amount changed for the Lloyds protectors with these new estimates?

Sami, owner of an automobile battery distributorship in Sharjah, UAE, performed an economic analysis 3 years ago when he decided to place surge protectors in-line for all his major pieces of testing equipment. The estimates used and the annual worth analysis at MAAR = 15% are summarized here. Two different manufacturers' protectors were compared. X Microsoft Excel Ele Edit View Insert Format Tools Date Window OBX O . Liclo D 2 f. 2171 3 105% 2. A. - MARR - A3 Case Study - Ch 6 A B C D 3 MARR = 1 15% Powrup Investment Annual Repair Year and salvage maint Savings BAW Value $ (6,642) $ (800) $ 25,000 Lloyd's Investment Annual Repair and salvage maint Savings $ (1,025) $ (300) $ 35,000 AW Powup $ 17,558 AW Lloyd's $ 27,675 D $ $ $ DOWN (26,00D) $ $ - $ - $ $ - $ 2,000 $ - $ (800) $ (800) $ (800) $ (200) $ (800) $ (800) $ - 25,000 25,000 25,000 25,000 25,000 25,000 $ $ $ $ $ $ $ $ (36,000) $ - $ $ (300) $ 35,000 $ (300) $ 35,000 - $ (300) $ 35,000 (900) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35.000 3,000 $ (900) $ 35,000 Shocte Sheets Sheet1 Sheet3 Srect Sheets Srect Sheet7 Ready Lloyd's Cost and installation Annual maintenance cost Salvage value Equipment repair savings Useful life, years PowrUp $-26,000 -800 2000 25,000 $-36,000 -300 3000 35,000 10 The spreadsheet in the above figure is the one Sami used to make the decision. Lloyd's was the clear choice due to its substantially large AW value. The Lloyd's protectors were installed. Sami, owner of an automobile battery distributorship in Sharjah, UAE, performed an economic analysis 3 years ago when he decided to place surge protectors in-line for all his major pieces of testing equipment. The estimates used and the annual worth analysis at MAAR = 15% are summarized here. Two different manufacturers' protectors were compared. X Microsoft Excel Ele Edit View Insert Format Tools Date Window OBX O . Liclo D 2 f. 2171 3 105% 2. A. - MARR - A3 Case Study - Ch 6 A B C D 3 MARR = 1 15% Powrup Investment Annual Repair Year and salvage maint Savings BAW Value $ (6,642) $ (800) $ 25,000 Lloyd's Investment Annual Repair and salvage maint Savings $ (1,025) $ (300) $ 35,000 AW Powup $ 17,558 AW Lloyd's $ 27,675 D $ $ $ DOWN (26,00D) $ $ - $ - $ $ - $ 2,000 $ - $ (800) $ (800) $ (800) $ (200) $ (800) $ (800) $ - 25,000 25,000 25,000 25,000 25,000 25,000 $ $ $ $ $ $ $ $ (36,000) $ - $ $ (300) $ 35,000 $ (300) $ 35,000 - $ (300) $ 35,000 (900) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35,000 - $ (300) $ 35.000 3,000 $ (900) $ 35,000 Shocte Sheets Sheet1 Sheet3 Srect Sheets Srect Sheet7 Ready Lloyd's Cost and installation Annual maintenance cost Salvage value Equipment repair savings Useful life, years PowrUp $-26,000 -800 2000 25,000 $-36,000 -300 3000 35,000 10 The spreadsheet in the above figure is the one Sami used to make the decision. Lloyd's was the clear choice due to its substantially large AW value. The Lloyd's protectors were installed