THE ONLY QUESTION THAT I'VE TO ANSWER

A. How has the amount of capital recovery changed for Lloyd's protectors with these new estimates? You must set the difference in AW (annual value). ???

Case study

The changing scenario of an annual value analysis

Harry, owner of a battery distributor in Atlanta, Georgia, conducted an economic analysis three years ago when he decided to place online voltage protectors for all the important parts of his test equipment. The estimates used and the annual value analysis to a MARR = 15% is summarized here. Two different manufacturer's protectors are compared.

The EXCEL spreadsheet shown below was used to make the decision. The company Lloyd was the clear decision because of its value AW substantially greater. Lloyd's guards settled in.

During a quick review this past year (year 3 of operation), it was obvious that maintenance costs and repair savings had not been in accordance with the estimated facts 3 years Back. In fact, the maintenance contract (which includes quarterly inspection) will increase from $300 At $1200 Next year and from there will increase 10% per year by the Next 10 years.

Also, the repair savings for the last 3 years were $35.000, $32.000And $28.000. Harry believes that savings can Decrease by $2.000 Per year thereafter. Finally, these 3-year old protectors are worth nothing in the current market. This makes the residual value in 7 years Zero instead of $3.000.

Powerup (S) Lloyd ($) Installation cost Installation cost 12.000 Annual Maintenance 600 -36.000 -300 cost Residual value Equipment Repair Savings 2.000 25.000 3.000 35.000 6 10 Lifespan, years --PMT(C 3,6,C10,C16,O) -PMT(C3,6, NPV(C3,E 11: E: 16),0,0) MARR 15 SUM(C8:E8) PowrUp Annual maint Lloyd's Annual maint AW PowrUp 18,815.2 Repair Repair savings YEAR AW values and salvage and salvage 57,025 5,584.74 600.00 25,000.00 (5300.00) $35,000 AW Lloyd's S (22,000.00) 5 (36,000) $27,675 (600) S25,000 (600) 25,000 (600) $25,000 (600) S 25,000 (600 25,000 (600) S 25,000 (300 35,000 (300) $35,000 (300) 35,00 (300) 35,000 (300) 35,000 (300 S 35,000 (300) S35,000 (300) 35,000 (300 35,000 (300) $35,000 12 14 15 16 2,000.00 S 18 19 PMT(C3,6,NPV(C3,D11:D:16),0,0) 10 3,000 S 21 Powerup (S) Lloyd ($) Installation cost Installation cost 12.000 Annual Maintenance 600 -36.000 -300 cost Residual value Equipment Repair Savings 2.000 25.000 3.000 35.000 6 10 Lifespan, years --PMT(C 3,6,C10,C16,O) -PMT(C3,6, NPV(C3,E 11: E: 16),0,0) MARR 15 SUM(C8:E8) PowrUp Annual maint Lloyd's Annual maint AW PowrUp 18,815.2 Repair Repair savings YEAR AW values and salvage and salvage 57,025 5,584.74 600.00 25,000.00 (5300.00) $35,000 AW Lloyd's S (22,000.00) 5 (36,000) $27,675 (600) S25,000 (600) 25,000 (600) $25,000 (600) S 25,000 (600 25,000 (600) S 25,000 (300 35,000 (300) $35,000 (300) 35,00 (300) 35,000 (300) 35,000 (300 S 35,000 (300) S35,000 (300) 35,000 (300 35,000 (300) $35,000 12 14 15 16 2,000.00 S 18 19 PMT(C3,6,NPV(C3,D11:D:16),0,0) 10 3,000 S 21