Question
O-Bike, a station-less bicycle-sharing system was introduced in University of Malaya in 2017. There were 200 units of O-Bikes available on campus. These available O-Bikes
O-Bike, a station-less bicycle-sharing system was introduced in University of Malaya in 2017. There were 200 units of O-Bikes available on campus. These available O-Bikes could still be used for the next four years, or they could be sold for RM80 per unit, and should be replaced with a new e-sharing vehicle system.
The emergence of UNiRIDE which offers energy efficient vehicles seems to be more attractive to the campus community, especially to the students. Each unit of the UNiRIDE costs RM200, and in order to balance the demand, a total of 300 units should be available on campus.
The projected market values and operating and maintenance costs for both system are shown in the following table.
Defender: O-Bike | Challenger: UNiRIDE | |||
EOY | MV at EOY | O&M Cost | MV at EOY | O&M Cost |
1 | $11,200 | $12,000 | $54,000 | $9,000 |
2 | $9,600 | $14,000 | $48,000 | $12,000 |
3 | $8,000 | $16,000 | $42,000 | $15,000 |
4 | $6,400 | $18,000 | $36,000 | $18,000 |
Assuming the MARR is 10%, determine:
a) the economic life of the challenger
b) when the defender should be replaced?
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