PE 3 Economic Analysis alternative 1 – Stake Body Truck Purchase YR 0 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 $35,325 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 ($10,000) YR 0 = ($35,000 per truck + $325 per canvas cover) * 1 truck = $35,325 Recurring end of each year = Annual Operations & Maintenance (O & M or OMA) Cost = $0.275 per mile * 50 miles per round trip * 800 round trips per year= $11,000 YR 6 = ($10,000) per truck * 1 truck = ($10,000)

Alternative 1

PE 7 Economic Analysis alternative 2 – CARGO VAN Purchase YR 0 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 $58,800 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 ($2,000) YR 0 = $58,800 per van * 1 van = $58,800 Recurring end of each year = Annual Operations & Maintenance (O & M or OMA) Cost = $0.225 per mile * 50 miles per round trip * 800 round trips per year= $9,000 YR 6 = ($2,000) per van * 1 van = ($2,000)

Alternative 2

Non recurring, Sunk cost, Salvage value, or Recurring Cost 5. The O & M cost in Alternative 1 is an example of what kind of cost? (circle one)   Non recurring, Sunk cost, Terminal value, Salvage Value, or Recurring Cost 6. In Alternative 1 The truck can be sold for $10,000. This can also be referred to as the: (circle one) Non recurring, Sunk cost, Salvage value, or Recurring Cost 7. Alternative 2 requires a van costing $58,800, this is an example of what kind of cost? (circle one) Non recurring, sunk cost, Terminal value, or Recurring Cost 8. What is the Uniform Annual cost without terminal value for Alternative 2? 9. What is the total discounted annual cost for Alternative 1? 10. What alternative would you recommend based on Uniform Annual Cost (with terminal value)? Why? 11. What is the Uniform Annual cost with terminal value for Alternative 2? d. $22,505 b. $83,219 Alternative 1, because it has a lower Uniform Annual Cost (with terminal value); a. $22,246