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Chapter8 236 to be locally idle or ready. The company believes it can de- The life estimates were developed by two different individuals sign and produce the JIT II software, the 3D printers, and the a design engineer and a manufacturing manager. They have accompanying computer equipment necessary to place this asked that, at this stage of the project, all analyses be performed technology in a wide variety of harsh environments-chemi- using both life estimates for each system. cally toxic to humans, in flight, underground in mines, on the ocean floor, in war-torn areas, etc. Case Study Exercises Information 12%, which server should be selected? If the MARR Use the PW or AW method to make the selection. I. For this case, we will analyze the available computers that can provide the server function necessary to make this inter- linking available and successful. The first cost and other pa- rameter estimates, including expected contribution to annual net cash flow, are summarized below. 2. Use incremental ROR analysis to decide between the servers at MARR 12%. 3. Use any method of economic analysis to display on the spreadsheet the value of the incremental ROR between server 2 with a life estimate of 5 years and a life estimate of 8 years First cost, S Net cash flow, S/year Server 1 100,000 35,000 Server 2 200,000 50,000 year 1, plus 5000 per year for years 2, 3, and 4 (gradient) 70,000 maximum for years 5 on, even if the server is replaced Life, years 3 or 4 5 or 8