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 A (tailored system), B (adapted system), and C (current system).

The costs are summarized on the next page. Perform a life-cycle cost analysis to identify the best alternative at 8% per year using

(a) tabulated factors first, then

(b) a spreadsheet to verify your selection.

Alternative Component Cost Estimates A Development $250,000 now, $150,000 years 1–4 Programming $45,000 now, $35,000 years 1,2 Operation $50,000 years 1 through 10 Support $30,000 years 1 through 5 B Development $10,000 now Programming $45,000 year 0, $30,000 years 1–3 Operation $80,000 years 1 through 10 Support $40,000 years 1 through 10 C Operation $175,000 years 1 through 10