A company is building a small datacentre inside one of its existing warehouses. It is considering...
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A company is building a small datacentre inside one of its existing warehouses. It is considering two different suppliers. Supplier A's equipment will cost $33,400 to install and Supplier B's will cost $47,500. Both suppliers have guaranteed that their equipment will last 10 years. Given that the machinery will need to be maintained at a certain temperature, cooling costs are a key factor in which machinery will be selected. The cooling cost will depend on temperatures throughout the year and fluctuating energy costs. The probability of annual costs is detailed below. The company has a MARR of 8% and wants to use an IRR analysis. Which supplier should be selected? SUPPLIER A Annual Cost $4,500 $7,000 $8,000 $9,250 Probability 0.10 0.60 0.25 0.05 SUPPLIER B Annual Cost $4,000 $5,275 $6,450 $8,500 Probability 0.20 0.60 0.15 0.05 A company is building a small datacentre inside one of its existing warehouses. It is considering two different suppliers. Supplier A's equipment will cost $33,400 to install and Supplier B's will cost $47,500. Both suppliers have guaranteed that their equipment will last 10 years. Given that the machinery will need to be maintained at a certain temperature, cooling costs are a key factor in which machinery will be selected. The cooling cost will depend on temperatures throughout the year and fluctuating energy costs. The probability of annual costs is detailed below. The company has a MARR of 8% and wants to use an IRR analysis. Which supplier should be selected? SUPPLIER A Annual Cost $4,500 $7,000 $8,000 $9,250 Probability 0.10 0.60 0.25 0.05 SUPPLIER B Annual Cost $4,000 $5,275 $6,450 $8,500 Probability 0.20 0.60 0.15 0.05
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WN1 Calculation of the Annual Cooling cost of 2 datacenters Supplier A450... View the full answer
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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