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.

The spreadsheet in below sheet is the one Harry used to make the decision. Lloyds was the clear choice due to its substantially larger AW value. The Lloyds protectors were installed.

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 from $300 to $1200 per year next year and will then increase 11% per year for the next 10 years. Also, the repair savings for the last 3 years were $29,655, $25,137, and $33,416, as best as Harry can determine. He believes savings will decrease by $3,845 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 more years.

Q2- 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. type your answer in the answer box

Q3- If these estimates had been made 3 years ago, would Lloyds still have been the economic choice

Q4- How has the capital recovery amount changed for the Lloyds 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 hand written verification solution using the factors/tables to calculate the AW value of the revised LIoyds scenario. To be uploaded as image or PDF. verification of Q2, answers Q3 &Q4 above.

ANNUAL WORTH ANALYSIS-THEN AND NOW Background and Information 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. Powrp Lloyd's -26,000 -36,000 -800 -300 Cost and installation, Annual maintenance cost, $ per year Salvage value, Equipment repair savings, Useful life, years 2,000 3,000 25,000 35,000 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 PoweUp Lloyd's Investment Annual Repair Investment Annual Repair Years and salvage maintenance and salvage maintenance savings o -$26,000 50 50 -536.000 50 50 1 50 -5800 $25,000 -5300 $35.000 2 $0 5800 $25,000 50 -5300 $35.000 3 50 -5800 $25.000 50 -$300 $35.000 50 -5800 525,000 50 -5300 $35,000 $0 -5800 $25,000 -5300 $35.000 6 50 -5800 $25,000 50 -$300 $35.000 7 3800 $25,000 -$300 $0 -5300 $35,000 . SO -5300 $35.000 10 $3.000 -5300 $35,000 AW element -56,068 -5800 $25,000 -$7.025 -5300 $35,000 Total AW $18.131.15 $27.67466 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 from $300 to $1200 per year next year and will then increase 11% per year for the next 10 years. Also, the repair savings for the last 3 years were $29,655, $25,137, and $33.416, as best as Harry can determine. He believes savings will decrease by $3,845 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 $2.000 Case Study Exercises Qu- Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven more years. . 02- 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 04- 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 hand written 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 Qa, answers Q3 &Q4 above. ANNUAL WORTH ANALYSIS-THEN AND NOW Background and Information 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. PowUp Lloyd's -26,000 -36,000 -800 --300 Cost and installation, Annual maintenance cost, $ per year Salvage value, $ Equipment repair savings, , 8 Useful life, years 2,000 3,000 25,000 35,000 6 10 PowrUp Lloyd's -26,000 -36,000 -800 -300 Cost and installation, $ Annual maintenance cost, $ per year Salvage value, Equipment repair savings, S Useful life, years 2,000 3,000 25,000 35,000 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 Years PoweUp Investment Annual and salvage maintenance -526,000 50 1 50 -5800 2 50 3 $0 $0 -3800 $0 -5800 50 -3000 $2.000 -3000 Repair savings 50 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Lloyd's Investment Annual Repair and salvage maintenance savings -536,000 50 50 50 -5300 $35,000 50 -5300 $35,000 50 -5300 $35,000 50 -5300 $35,000 $0 -$300 $35,000 50 -5300 $35,000 30 $300 $35,000 50 $300 $35,000 30 $35.000 53,000 535,000 -57,025 -5300 $35,000 $27.67466 10 AW element Total AW -56,068 525,000 $18, 131.35 MARR 1596 PoweUp Investment Annual Years and salvage maintenance 0 -526,000 $0 1 $0 -5800 2 $0 -$800 3 $0 -5800 4 $0 -$800 5 $0 -5800 6 $0 -5800 $2,000 -$800 8 9 10 AW element -56,068 -5800 Total AW Repair savings 50 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Lloyd's Investment Annual Repair and salvage maintenance savings -536,000 SO 50 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $3,000 -5300 $35,000 -$7,025 -5300 $35,000 $27,674.68 $25,000 $18,131.35 ANNUAL WORTH ANALYSIS-THEN AND NOW Background and Information 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. Powrp Lloyd's -26,000 -36,000 -800 -300 Cost and installation, Annual maintenance cost, $ per year Salvage value, Equipment repair savings, Useful life, years 2,000 3,000 25,000 35,000 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 PoweUp Lloyd's Investment Annual Repair Investment Annual Repair Years and salvage maintenance and salvage maintenance savings o -$26,000 50 50 -536.000 50 50 1 50 -5800 $25,000 -5300 $35.000 2 $0 5800 $25,000 50 -5300 $35.000 3 50 -5800 $25.000 50 -$300 $35.000 50 -5800 525,000 50 -5300 $35,000 $0 -5800 $25,000 -5300 $35.000 6 50 -5800 $25,000 50 -$300 $35.000 7 3800 $25,000 -$300 $0 -5300 $35,000 . SO -5300 $35.000 10 $3.000 -5300 $35,000 AW element -56,068 -5800 $25,000 -$7.025 -5300 $35,000 Total AW $18.131.15 $27.67466 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 from $300 to $1200 per year next year and will then increase 11% per year for the next 10 years. Also, the repair savings for the last 3 years were $29,655, $25,137, and $33.416, as best as Harry can determine. He believes savings will decrease by $3,845 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 $2.000 Case Study Exercises Qu- Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven more years. . 02- 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 04- 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 hand written 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 Qa, answers Q3 &Q4 above. ANNUAL WORTH ANALYSIS-THEN AND NOW Background and Information 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. PowUp Lloyd's -26,000 -36,000 -800 --300 Cost and installation, Annual maintenance cost, $ per year Salvage value, $ Equipment repair savings, , 8 Useful life, years 2,000 3,000 25,000 35,000 6 10 PowrUp Lloyd's -26,000 -36,000 -800 -300 Cost and installation, $ Annual maintenance cost, $ per year Salvage value, Equipment repair savings, S Useful life, years 2,000 3,000 25,000 35,000 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 Years PoweUp Investment Annual and salvage maintenance -526,000 50 1 50 -5800 2 50 3 $0 $0 -3800 $0 -5800 50 -3000 $2.000 -3000 Repair savings 50 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Lloyd's Investment Annual Repair and salvage maintenance savings -536,000 50 50 50 -5300 $35,000 50 -5300 $35,000 50 -5300 $35,000 50 -5300 $35,000 $0 -$300 $35,000 50 -5300 $35,000 30 $300 $35,000 50 $300 $35,000 30 $35.000 53,000 535,000 -57,025 -5300 $35,000 $27.67466 10 AW element Total AW -56,068 525,000 $18, 131.35 MARR 1596 PoweUp Investment Annual Years and salvage maintenance 0 -526,000 $0 1 $0 -5800 2 $0 -$800 3 $0 -5800 4 $0 -$800 5 $0 -5800 6 $0 -5800 $2,000 -$800 8 9 10 AW element -56,068 -5800 Total AW Repair savings 50 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Lloyd's Investment Annual Repair and salvage maintenance savings -536,000 SO 50 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $0 -5300 $35,000 $3,000 -5300 $35,000 -$7,025 -5300 $35,000 $27,674.68 $25,000 $18,131.35