PE 4 Economic Analysis alternative 1 - BUY YR 0 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 $40,000 $50,080 $50,080 $50,080 $50,080 $50,080 $50,080 $50,080 $800 (-$16,000) YR 0 = 8 machines * $5,000 per machine = $40,000 Recurring end of each year = Annual Paper Usage = $0.04 per sheet * 12,000 copies per month per machine * 12 months per year * 8 machines= $46,080 per year Annual Maintenance = $4,000 per year Total reoccurring Cost per Year =$46,080 per year + $4,000 per year= $50,080 per year YR 4 = $100 per machine * 8 machines = $800 YR 5 = (-$2,000) per machine * 8 machines = (-$16,000)

ALTERNATIVE 1

PE 4 Economic Analysis alternative 2- LEASE YR 0 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 $300 $61,600 $61,600 $61,600 $61,600 $61,600 $61,600 $61,600 YR 0 = $300 special training = $300 Recurring end of each year = Lease= $500 per machine * 8 machines = $4,000 per year Annual Paper Usage = $0.05 per sheet * 12,000 copies per month per machine * 12 months per year * 8 machines= $57,600 per year Total reoccurring Cost per Year =$4,000 per year + $57,600 per year= $61,600 per year

ALTERNATIVE 2

5. Which alternative would you recommend & why?   6. The maintenance in Alternative 1 is an example of what kind of cost? (circle one) Non recurring, Sunk cost, Salvage value, or Recurring Cost 7. In Alternative 1 The machines can be sold for $2,000 each. This can also be referred to as the: (circle one)    Non recurring, end cost, Terminal value, or Recurring Cost 8. Alternative 2 requires special training, this is an example of what kind of cost? (circle one) Cost-to-be-the-Boss end cost, Terminal value, Recurring Cost, or Non recurring, 9. What is the Uniform Annual cost without terminal value for Alternative 2? 10. What is the total discounted annual cost for Alternative 1? 11. What is the Uniform Annual cost with terminal value for Alternative 2? ALT 1- Lowest Net Total Project Cost (discounted) a. $61,662 c. $284,286 a. $61,662