1. Economic Analysis Team Project California State Polytechnic University, Pomona Replacement Analysis (Team 3) Winter Quarter, 2008 Repair or Replace Old Computers

2. Team Members Paul S. Cobian-Organizer Mynor Piedrasanta-Techie Spencer Lee-Summarizer California State Polytechnic University, Pomona

3. Replacement Analysis Equipment: Retained or replaced? –Defender –Challenger Reasons - Obsolescence -Depletion -Deterioration Analysis Technique 3 –Compare EUAC Defender – remaining useful life Challenger – minimum cost life

4. Defender 50 Computers No salvage value Annual Maintenance: $5,000 Increasing by $750 annually Productivity: $50 per computer (decreasing 5% annually) Labor costs: $18 per hour with 3% annual increase.

5. Challenger 1 (Dell Vostro) $896 per computer 1.6 Ghz 512 MB RAM 80 GB Hard drive Software $33 per computer increases $5 per year Productivity: $350 per computer Decreasing by 5% Maintenance first 3 years free, $50 per computer w/ $10 incr. annually Labor costs: $18/hr with 3% annual incr.

6. Challenger 2 (HP xw4600) $1545 per computer Duo core 2.33 Ghz 1 GB RAM 250 GB Hard drive Software $33 per computer increases $5 per year Productivity: $525 per computer Decreasing by 5% Maintenance first 3 years free, $50 per computer w/ $10 increase per year Labor costs: $18 per hour with 3% annual increase.

7. Challenger Comparison Dell EUACHP EUAC 0Total 1-$32,534.00-$58,830.00 2-$9,813.33-$20,783.13 3-$2,559.73-$8,108.24 4-$1,112.14-$4,478.32 5-$1,563.48-$2,814.05 6-$701.41-$947.24 7-$267.30$192.48 8-$105.21$880.80 9-$134.30$1,265.06 10-$312.22$1,427.78 11-$618.63$1,415.22 12-$1,047.29$1,251.56 13-$1,601.99$946.21 14-$2,294.64$497.70 15-$3,144.41-$104.22 HP Wins!

8. Sensitivity Analysis HP vs. Dell Maintenance CostChoose $100HP $300HP $500HP $750HP $1,000HP ProductivityChoose 5%HP 10%HP 11%HP 12%Dell 15%Dell 25%Dell Hourly SalaryChoose $15.00HP $18.00HP $20.00HP $25.00HP $35.00HP HP Wins

9. Defender vs. Hp Defender EUACHP EUAC 0Total 1-$5,900.00-$58,830.00 2-$6,520.70-$20,783.13 3-$7,148.01-$8,108.24 4-$7,789.43-$4,478.32 5-$8,453.91-$2,814.05 6-$9,152.18-$947.24 7-$9,897.14$192.48 8-$10,704.27$880.80 9-$11,592.21$1,265.06 10-$12,583.38$1,427.78 11-$13,704.74$1,415.22 12-$14,988.72$1,251.56 13-$16,474.32$946.21 14-$18,208.38$497.70 15-$20,247.13-$104.22 HP Wins

10. Sensitivity Analysis HP vs. Defender Maintenance CostChoose $100HP $300HP $500HP $750HP $1,000HP ProductivityChoose 5%HP 10%HP 15%HP 20%HP 25%HP 30%HP Hourly SalaryChoose $15.00HP $18.00HP $20.00HP $25.00HP $35.00HP HP Wins

11. Overall Analysis HP Computer Best Option Better alternative (EUAC + Sensitivity) High productivity offsets high cost