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28 Sep 2019
Two alternative machines are being considered for a cost reductionproject.
Machine A has a first cost of $60,000 and a salvage value of$22,000 at the end of it 6 year service life. Annual operatingcosts of this machine and the associated probabilities areestimated as follows:
Annual O&MCosts Probability
$5,000 0.20
8,000 0.30
10,000 0.30
12,000 0.20
Machine B has a first cost of $35,000 and its salvage value at theend of it 4-year service life is negligible. Annual operating costsof this machine and the associated probabilities are estimated asfollows:
Annual O&MCosts Probability
$8,000 0.10
10,000 0.30
12,000 0.40
14,000 0.20
The MARR on this project is 10%. The required service period isestimated to be 12 years. Assuming independence, calculate the meanand variance for the equivalent annual cost of operating eachmachine.
Two alternative machines are being considered for a cost reductionproject.
Machine A has a first cost of $60,000 and a salvage value of$22,000 at the end of it 6 year service life. Annual operatingcosts of this machine and the associated probabilities areestimated as follows:
Annual O&MCosts Probability
$5,000 0.20
8,000 0.30
10,000 0.30
12,000 0.20
Machine B has a first cost of $35,000 and its salvage value at theend of it 4-year service life is negligible. Annual operating costsof this machine and the associated probabilities are estimated asfollows:
Annual O&MCosts Probability
$8,000 0.10
10,000 0.30
12,000 0.40
14,000 0.20
The MARR on this project is 10%. The required service period isestimated to be 12 years. Assuming independence, calculate the meanand variance for the equivalent annual cost of operating eachmachine.
Machine A has a first cost of $60,000 and a salvage value of$22,000 at the end of it 6 year service life. Annual operatingcosts of this machine and the associated probabilities areestimated as follows:
Annual O&MCosts Probability
$5,000 0.20
8,000 0.30
10,000 0.30
12,000 0.20
Machine B has a first cost of $35,000 and its salvage value at theend of it 4-year service life is negligible. Annual operating costsof this machine and the associated probabilities are estimated asfollows:
Annual O&MCosts Probability
$8,000 0.10
10,000 0.30
12,000 0.40
14,000 0.20
The MARR on this project is 10%. The required service period isestimated to be 12 years. Assuming independence, calculate the meanand variance for the equivalent annual cost of operating eachmachine.
Sixta KovacekLv2
28 Sep 2019
