Engineering Economics - Assignment Example

The paper 'Engineering Economics' is a great example of a Macro and Microeconomics Assignment. Solution Steps for the LCM method: Since the LCM of both service lives is 18 years, alternative A will have three cycles while alternative B will have two cycles. For alternative A, the solution is: PWA = – 2500 – 2500 (P/F, 10%, 6yrs) – 2500 (P/F, 10%, 12yrs) + 200 (P/F, 10%, 6yrs) + 200 (P/F, 10%, 12yrs) + 200 (P/F, 10%, 18yrs) – 1000 (P/A, 10%, 18yrs)

Combining similar terms yields:

PWA = – 2500 – 2300 (P/F, 10%, 6yrs) – 2300 (P/F, 10%, 12yrs) + 200 (P/F, 10%, 18yrs) – 1000 (P/A, 10%,

18yrs)

PWA = – 2500 – 1298.5 – 732.8 + 36.0 – 8201 = $-12,696.

• For alternative B, the solution is:

PWB = – 6000 – 6000 (P/F, 10%, 9yrs) + 100 (P/F, 10%, 9yrs) + 100 (P/F, 10%, 18yrs) – 100 (P/A, 10%, 18yrs)

PWB = – 6000 – 2544 + 42.4 + 18.0 – 820.1 = $ – 9,303

• Therefore, the least cost alternative is B.

Solution Steps for the five year study period

• For alternative A, the solution is:

PWA = – 2500 – 1000 (P/A, 10%, 5yrs) + 200 (P/F, 10%, 5yrs)

PWA = – 2500 – 3791 + 124.2 = $-6,167

• For alternative B, the solution is:

PWB = – 6000 - 100 (P/A, 10%, 5yrs) + 100 (P/F, 10%, 5yrs)

PWB = – 6000 – 379.1 + 62.09 = $ – 6,317

• Alternative A is the least cost alternative.
• Therefore, if the project engineer used this method, he used alternative A to install networking and network access facilities in the central headquarters of E-Tron Electronics Company.