Calculation 4 An engineer plans to design and build a pick-and-place machine for a specialized product line. The alternatives are to contract the design to an external company and build the machine in-house or to contract the design and construction to the external company. The MARR is 9 %. In-House Design and Build Initial costs: $15,000 Labor: $3,300 per year Power: $400 per year Maintenance: $2,400 per year Taxes and Insurance: $300 per year Service Life: 10 years External Design and In-House Build Contract: $7,500 Initial costs: $12,000 at 4 months Labor: $2,300 in Year 1, $3,300 per year in following years Power: $400 per year beginning at month 5 Maintenance: $2,400 per year after Year 1 Taxes and Insurance: $340 in Year 1, $300 per year in following years Service Life: 15 years External Design and Build Contract: $25,000 Labor: $1,450 per year Power: $600 per year, beginning at month 8 Maintenance: $3,075 Taxes and Insurance: $500 per year Service Life: 15 years What is the present worth of the three approaches? What is the present worth over 30 years? Calculation 4 An engineer plans to design and build a pick-and-place machine for a specialized product line. The alternatives are to contract the design to an external company and build the machine in-house or to contract the design and construction to the external company. The MARR is 9 %. In-House Design and Build Initial costs: $15,000 Labor: $3,300 per year Power: $400 per year Maintenance: $2,400 per year Taxes and Insurance: $300 per year Service Life: 10 years External Design and In-House Build Contract: $7,500 Initial costs: $12,000 at 4 months Labor: $2,300 in Year 1, $3,300 per year in following years Power: $400 per year beginning at month 5 Maintenance: $2,400 per year after Year 1 Taxes and Insurance: $340 in Year 1, $300 per year in following years Service Life: 15 years External Design and Build Contract: $25,000 Labor: $1,450 per year Power: $600 per year, beginning at month 8 Maintenance: $3,075 Taxes and Insurance: $500 per year Service Life: 15 years What is the present worth of the three approaches? What is the present worth over 30 years