A medium-size municipality plans to develop a software system to assist in project selection during the next 10 years. A life-cycle cost approach has been used to categorize costs into development, programming, operating, and support costs for each alternative. There are three alternatives under consideration, identified as M, N, and O.

The costs are summarized below. Use an annual life-cycle cost approach to identify the best alternative at 8% peryear.

Alternative Component Estimated Cost Developmn $250,000 now $150,000 years 1-4 Programming $45,000 now $35,000 years 1, 2 $50,000 years 1-10 $30,000 years 1-5 $10,000 now $45,000 year 0, $30,000 years1-3 $80,000 years 1-10 $40,000 years 1-10 $175,000 years 1-10 Operation Support Development Programming Operation Support Operation