1. Suppose we have two alternative designs, each of which yields a different present value of the total lifetime cost: the first is $1604 and the second is $1595. Verify that the present value of the lifetime cost for the second system is indeed $1,595, following the assumptions of:

• an initial cost of $1500,
• an annual maintenance cost of $25,
• no overhaul required, and
• a 10% discount rate on the annual maintenance costs (initial costs will not have a discount rate).

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To verify that the present value of the lifetime cost for the second system is indeed 1595 we need t... View the full answer