NAME: Huash Patel. CAE 574 ECONOMIC DECISION ANALYSIS IN CIVIL ENGINEERING MID-TERM EXAMINATION FALL 2018 October 4, 2018 1 10 (Open book, open notes - No laptops, no cellphones, no Internet connection) 20 1. A construction company's board of directors is to examine four independent proposals submitted by four different departments. Proposal A involves replacing the old excavation equipment by a new fleet. Proposal B consists of purchasing a new head office building. Proposal C is to buy a modern mainframe computer. And Proposal D consists of making an investment into a plant that could produce prefabricated concrete panels. The cash flows related to each independent proposal are given in the following table: PROPOSALS A B C D Initial Cost ($103) 70 200 70 350 Annual Operating Cost ($103/yr) 2.5 1.6 1.6 12 Income, first year ($103) 20 13 13 24 Income, following years ($103/yr) G= - 1 13 G =+1 24 Salvage value at end of analysis 0 100 5 100 period ($103) Analysis period (yrs) 8 8 8 8 a) The cash that the company has available now (to pay initial costs) is $150,000. Given this limitation, write down the possible alternatives that are worth considering for further economic analysis. b) Use the Annual Equivalent Method to calculate which of the following three alternatives is the most desirable: Alternative "A", Alternative "C", and Alternative "A+C". Use MARR = 10% and assume that these alternatives are mutually exclusive (only one alternative will be funded). 1 of 3