Question

Harry, owner of an automobile battery distributorship in Atlanta, Georgia, performed an economic analysis 3 years ago when he decided to place surge protectors in-line for all his major pieces

of testing equipment. The estimates used and the annual worth analysis at MARR = 15% are summarized below. Two different manufacturers'protectors were compared. During a quick review this last year (year 3 of operation), it was obvious that the maintenance costs and repair savings have not followed (and will not follow) the estimates made 3 years ago. In fact, the maintenance contract cost (which includes quarterly inspection) is going from $300 to $1200 per year next year and will then increase 5% per year for the next 10 years. Also, the repair savings for the last 3 years were $31,186, $25,508, and $34,259, as best as Harry can determine. He believes savings will decrease by $1,809 per year hereafter. Finally, these 3-year-old protectors are worth nothing on the market now, so the salvage in 7 years is zero, not $3000. Q1- Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven more years. • Q.2- With these new estimates, what is the recalculated AW for the Lloyd's protectors? Use the old first cost and maintenance cost estimates for the first 3 years. type your answer in the answer box Q 3- If these estimates had been made 3 years ago, would Lloyd's still have been the economic choice Q 4- How has the capital recovery amount changed for the Lloyd's protectors with these new estimates?

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