Cost componentAlphaBetaCharliedevelopment100,000 immediately150,000 year 110,000 immediatelyNoneProgramming45,000 immediately35,000 year 145,000 immediately30,000 year 1NoneOperations50,000 1-1080,000 years 1-10150,000 years 1-10support30,000 1-1040,000 years 1-10none If each system is expected to have a 10-year life,1. calculate the net present value for each system if the cost of capital is 8%. 2. Specify which system should be selected and why

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Answered: Cost component Alpha Beta Charlie…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Cost component	Alpha	Beta	Charlie
development	100,000 immediately 150,000 year 1	10,000 immediately	None
Programming	45,000 immediately 35,000 year 1	45,000 immediately 30,000 year 1	None
Operations	50,000 1-10	80,000 years 1-10	150,000 years 1-10
support	30,000 1-10	40,000 years 1-10	none

If each system is expected to have a 10-year life,

1. calculate the net present value for each system if the cost of capital is 8%.

2. Specify which system should be selected and why

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