Harry, owner of an automobile battery distributorship in Atlanta, Georgia, 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 MARR - 15% are summarized below. Two different manufacturers' protectors were compared PowrUp Lloyd's Cost and installation, -26,000 -36.000 Annual maintenance cost, per year -800 -300 Salvage value, $ 2,000 3,000 Equipment repair savings, S 25.000 35,000 Useful life years 6 10 The spreadsheet in below sheet is the one Harry used to make the decision. Lloyd's was the clear choice due to its substantially larger AW value. The Lloyd's protectors were installed. MARR 15% 1 2 4 PoweUp Lloyd's Investment Annual Repair Investment Annual Years Repair and salvage maintenance savings and salvage maintenance savings -526,000 $0 50 -$36.000 50 50 SO 5800 $25,000 $0 -$300 $35,000 $0 -5800 $25,000 50 -$300 $35.000 3 50 - 5800 $25,000 50 -$300 $35,000 $0 -5800 $25,000 SO -5300 $35,000 50 -5800 $25,000 $0 -5300 $35,000 50 $800 $25,000 50 -$300 $35,000 $2,000 -5800 $25,000 50 $300 $35,000 50 -$300 $35,000 50 -$300 $35,000 $3,000 -$300 $35,000 AW element -$6,642 -5800 525,000 $7,025 -5300 $35.000 Total AW $17,558.31 $27,674.68 During a quick review this last year (year 3 of operation), it was obvious that 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 increase form $300 to $1200 per year next year and will then increase 12% per year through the 10 years. Also, the repair savings for the last 3 years were $28,783 in year 1, $25,285 in year 2, and $35,691 in year 3, as best as Harry can determine. He believes starting from years 4 savings will decrease by $1,557 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. 5 6 7 8 9 10 -$6,642 -5800 -$300 AW element Total AW $35,000 $25,000 -$7,025 $17.558.31 $27,674.68 During a quick review this last year (year 3 of operation), it was obvious that 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 increase form $300 to $1200 per year next year and will then increase 12% per year through the 10 years. Also, the repair savings for the last 3 years were $28,783 in year 1, $25,285 in year 2, and $35,691 in year 3. as best as Harry can determine. He believes starting from years 4 savings will decrease by $1,557 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 Q1- Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven Q2. With these new estimates, what is the recalculated AW for the Lloyd's protectors? Use the old first cost and maintenance cost estimates for the first 3 years, type your answer in the answer box . 03- If these estimates had been made 3 years ago, would Lloyd's still have been the economic choice Q4- How has the capital recovery amount changed for the Lloyd's protectors with these new estimates? Submission details: 1- Each student must submit an excel file with the required solution (graphs and tables). answers of Q1 & Q2 above. 2- Each Student to submit one file of a handwritten verification solution using the factors/tables to calculate the AW value of the revised Lloyds scenario. To be uploaded as image or PDF. verification of Q2, answers Q3 &Q4 above. more years. Harry, owner of an automobile battery distributorship in Atlanta, Georgia, 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 MARR - 15% are summarized below. Two different manufacturers' protectors were compared PowrUp Lloyd's Cost and installation, -26,000 -36.000 Annual maintenance cost, per year -800 -300 Salvage value, $ 2,000 3,000 Equipment repair savings, S 25.000 35,000 Useful life years 6 10 The spreadsheet in below sheet is the one Harry used to make the decision. Lloyd's was the clear choice due to its substantially larger AW value. The Lloyd's protectors were installed. MARR 15% 1 2 4 PoweUp Lloyd's Investment Annual Repair Investment Annual Years Repair and salvage maintenance savings and salvage maintenance savings -526,000 $0 50 -$36.000 50 50 SO 5800 $25,000 $0 -$300 $35,000 $0 -5800 $25,000 50 -$300 $35.000 3 50 - 5800 $25,000 50 -$300 $35,000 $0 -5800 $25,000 SO -5300 $35,000 50 -5800 $25,000 $0 -5300 $35,000 50 $800 $25,000 50 -$300 $35,000 $2,000 -5800 $25,000 50 $300 $35,000 50 -$300 $35,000 50 -$300 $35,000 $3,000 -$300 $35,000 AW element -$6,642 -5800 525,000 $7,025 -5300 $35.000 Total AW $17,558.31 $27,674.68 During a quick review this last year (year 3 of operation), it was obvious that 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 increase form $300 to $1200 per year next year and will then increase 12% per year through the 10 years. Also, the repair savings for the last 3 years were $28,783 in year 1, $25,285 in year 2, and $35,691 in year 3, as best as Harry can determine. He believes starting from years 4 savings will decrease by $1,557 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. 5 6 7 8 9 10 -$6,642 -5800 -$300 AW element Total AW $35,000 $25,000 -$7,025 $17.558.31 $27,674.68 During a quick review this last year (year 3 of operation), it was obvious that 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 increase form $300 to $1200 per year next year and will then increase 12% per year through the 10 years. Also, the repair savings for the last 3 years were $28,783 in year 1, $25,285 in year 2, and $35,691 in year 3. as best as Harry can determine. He believes starting from years 4 savings will decrease by $1,557 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 Q1- Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven Q2. With these new estimates, what is the recalculated AW for the Lloyd's protectors? Use the old first cost and maintenance cost estimates for the first 3 years, type your answer in the answer box . 03- If these estimates had been made 3 years ago, would Lloyd's still have been the economic choice Q4- How has the capital recovery amount changed for the Lloyd's protectors with these new estimates? Submission details: 1- Each student must submit an excel file with the required solution (graphs and tables). answers of Q1 & Q2 above. 2- Each Student to submit one file of a handwritten verification solution using the factors/tables to calculate the AW value of the revised Lloyds scenario. To be uploaded as image or PDF. verification of Q2, answers Q3 &Q4 above. more years