Question 6.X: Use the CW method to determine which mutually exclusive brid...

Engineering Economy [EXP-20136]

Use the CW method to determine which mutually exclusive bridge design (L or H) to recommend, based on the data provided in the accompanying table. The MARR is 15% per year. (6.4)

	Design L	Design H
Capital investment	$274,000	$326,000
Annual expenses	$10,000	$8,000
Periodic upgrade cost	$50,000	$42,000
	(every sixth year)	every sixth year
Market value	0	0
Useful life (years)	83	92

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$CW_{L}$ (15%) = $\left[\frac{- \$274,000\left(A/P , 15\%, 83\right) – \$10,000 – \$50,000\left(A/F, 15\%, 6\right) }{0.15} \right]$

= − $ $\underline{378, 733}$

$CW_{H}$ (15%) = $\left[\frac{- \$326,000\left(A/P , 15\%, 92\right) – \$8,000 – \$42,000\left(A/F, 15\%, 7\right) }{0.15} \right]$

= − $404, 645
Select Bridge Design L to minimize cost

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