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HW4 Soln 10

# HW4 Soln 10 - ENG 106 Problem 12.6 Homework#4 Solution...

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ENG 106 Homework #4 Solution Winter 2010 Problem 12.6 Given: MARR, i: 10% three M.E. alternatives for parking structures, 30-yr need Design: A B C Site cost, \$ 240 180 200 Bldg cost, \$ 2200 700 1400 Annual income, \$ 830 750 600 Annual maint cost, \$ 410 360 310 Service life, yrs 30 30 30 Net salvage value, \$ 0 0 0 Find: Which alt to select, using B/C criterion as the basis Soln: Several correct ways to handle various flows, will get different numbers but same decision. We will include all inflows as benefits, outflows as costs. Design A: PW of bens = 830(P/A,10%,30) = 7824 PW of costs = 240 + 2200 + 410(P/A,10%,30) = 6305 Design: B C PW of bens: 7070 5656 PW of costs: 4274 4522 Incremental analysis (can compare any two at a time; make sure delta cost > 0) Increment: B-nothing C-B A-B delta bens 7070 -1414 754 delta costs 4274 248 2031 delta bens/delta costs 1.65 -5.70 0.37 Reject an increment (and therefore costlier alt) if del bens/del costs < 0 Decision: reject ___ nothing C A Final decision: choose B Problem 2. Given: Market MARR, i: 12% Inflation rate, f: 8% Three repeatable alternatives, ten-year need Cash flows for first copies of three M.E. alts, in actual \$ EOY B C D 0 -50 -100 -100 1 100 0 10 2 -30 0 20 3 30 30 4 70 40 5 130 125 Find: The best alternative, using B/C ratio as the basis Solution: One way is to inflate all future flows to actual year-n \$ (another would be to deflate all flows to constant dollars)

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Costs and bens each year for 10-yr analysis period, actual \$ (another way: consider initial costs vs net bens in each later yr) Project B Project C Project D EOY Costs Bens Costs Bens Costs Bens 0 50 0 100 0 100 0 yr0 costs = - flow0 1 0 100 0 0 0 10 yr1 bens = flow1 2 88 0 0 0 0 20 total yr2 cost for ProjB=-(cost2+cost0*(1+f)^2) 3 0 117 0 30 0 30 4 103 0 0 70 0 40 5 0 136 147
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HW4 Soln 10 - ENG 106 Problem 12.6 Homework#4 Solution...

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