Try to perform the roof problem analysis for both cases, and then answer the questions.

1) For the pavement analysis, what is the correct decision?

Concrete

Asphalt

Don't repave the lot

Close the missile engineering office

2) For the pavement analysis, what is the annual worth of the concrete option?

$3,300

( $3,000 )

( $3,300 )

$3,000

3) For the NASA situation, what should NASA do?

Stop using the test stand

Hire Tom's Gauges

Do nothing

Hire HP Calibration Services

4) What is the annual worth of the calibration performed by HP?

( $31,000)

( $32,000)

( $32,500 )

( $31,500 )

Pavement Analysis: Lockheed Martin in Huntsville has too many potholes in the parking lot next to their missile engineering offices. They solicited two bids for repaving the lot. Roll Tide Paving will put down asphalt pavement for $20,000 and guarantees the surface for ten years. Alabama Concrete will put in a concrete parking lot for $30,000 and guarantee it for 25 years. Lockheed assumes the pavement will last only as long as the guarantee. Their discount rate is 10%. Calibration Analysis NASA has a rocket engine test stand that is out of calibration. Tom's Gauges, a local Huntsville company, put in a bid to recalibrate all the sensors on the test stand for $100,000. NASA estimates the test stand will stay in calibration for 3 years. NASA usually employs HP Calibration Services for this work, but they will charge $250,000. However, the HP approach will keep the stand calibrated for 12 years. Because NASA is part of the federal government, they use a discount rate of 7% for these decisions