Problem 1 - 10 points Company A plans to replace with one of their current equipment with one of the three options shown in the table. Option Initial Cost 200 350 475 Annual Operation Cost 450 275 300 Salvage Value 75 60 80 Estimated Life in Year 20 20 20 Perform PW analysis to figure out which option should company A choose. The rate of return is 8% per year compounded Monthly. Problem 2-10 points Company B must choose one of two methods for its validation activity. Based on the information below, perform a PW analysis and make recommendation. MARR is 10% per year compounded quarterly. Method Initial Cost Annual Operation Cost 100,000 30,000 in year one increasing by 5000 each year 250000 20,000 Salvage Value Estimated Life in Year 3 Problem 3-10 points Company C is seeking for help to decide this option to choose to upgrade their current bottleneck equipment. There are two vendors and one rental option. The cost details are shown in the table below. Rental Option Vender R Initial Cost 75000 Annual Operation Cost 28000 Salvage Value Estimated Life in Year 2 MARR = 10% per year compounded monthly. Vender T 125000 12000 30000 52000 Maximum 3 years 1. Select from the two sales vendors using the LCM and PW analysis. 2. Determine which of the three options is cheaper over a 3 year study period. Problem 4-10 points Company D needs to decide which option to choose for their pipeline routings. Option Initial Cost 225,000,000 350,000,000 Annual Operation Cost 30,000,000 6,000,000 Maintenance cost per 50,000,000 every 40 years Estimated Life in Year Infinite Infinite Find the capital cost of each option with MARR = 9% per year and determine which option would you recommend? Problem 5-10 points Investor X has 7,000 to spend on the following three projects. Use the PW method to determine which of these independent investments are financially acceptable at 6% per year compounded monthly interest rate. Option Installed Cost 4500 3000 2200 Return per month 220 200 140