Engineering Economy

Excel and tables cannot be used. It mus be done with Compound interest factors.

Problem 2 (22 Points) Determine which of the two alternatives should be selected based on the Annual Worth analysis. The interest rate is 6% per year. Note: (i) The table below shows the cash flow for the two alternatives. (i) Draw the cash flow diagrams of the alternatives Clearly show all work including factor notation, equations, and values of factors Alternative A 500,000 Alternative B 700,000 -18,000 - 50,000 First cost (S) Annual maintenance cost (S/year)-25,000 Major overhaul cost in year 5 ($) Major overhaul cost in year 8 (5) -60,000 Salvage value at the end of the life 40,000 of alternative (S) 60,000 15 Life (years) Infinity