Do not solve with excel. use PW formulas.. PW= P(A/P,i,n)

EAC and EAW

Report R2 - Midwestern Hospital Association, Inc. Midwestern Hospital Association, Inc. is interested in upgrading its nursing tower facilities in response to technological obsolescence, rising energy and maintenance costs, and increasing staffing costs. There are three alternatives under consideration. These alternatives include: remain in existing nursing towers (do nothing), renovate the existing facilities, or build new nursing towers. The estimated costs of the three alternatives are as follows: Alternative 1 - Remain in existing Nursing Towers Cost, $ Replace Air Handling Units Every 5 Years Re-Roof Nursing Towers Every 10 Years Nursing Tower Salvage Value after 25 Years Annual Energy Consumption (Cost) Maintenance/Repair Costs/Year Nursing Staff Annual Costs Alternative 2 - Renovate Nursing Towers (200,000 square feet) 2,000,000 250,000 0% 850,000 1,250,000 7,776,000 Cost, $ 50/SF 250,000 Renovation Construction Cost Re-Roof Nursing Towers Every 10 Years Nursing Tower Salvage Value after 25 Years Annual Energy Consumption (Cost) Maintenance/Repair Costs/Year Nursing Staff Annual Costs Alternative 3 - Build New Nursing Towers (180,000 SF) 750,000 1,100,000 6,480,000 Cost, s New Construction Cost Demolish Existing Nursing Towers Nursing Tower Salvage Value after 25 Years Annual Energy Consumption (Cost) Maintenance/Repair Costs/Year Nursing Staff Annual Costs 120/SF 50/SF 50% 650,000 800,000 5,180,000 The hospital's Sr. Vice President of Facilities requested that you, the Construction Manager, provide a recommendation regarding the alternative of choice. You must perform a life cycle cost analysis by computing both the Present Worth (PW) and the Equivalent Annual Worth (EAW) or Costs (EAC). The economic criteria that are the same for all of the alternatives are as follows: Project life cycle 25 years Interest Rate Inflation approach 10% compounded annually Constant dollars $325,000/year Staffing costs escalation