2.1 BMW is considering developing a new auto pilot system using Al. They have na
ID: 2814745 • Letter: 2
Question
2.1 BMW is considering developing a new auto pilot system using Al. They have narrowed their choices down to two altematives. System A System B S 513,000.00S 465,000.00 First Cost Salvage value Annual Benefi Annual O&M Cost Life MARR S 323,000.00S 266,000.00 247,000.00 275,000.00 S 180,500.00 S 123,500.00 8% 8% a) Calculate the PW for both the alternatives. 13 point b) Calculate the AW for both the altematives.[3 points] c) Calculate the FW for both the altematives. [3 points] d) Which altemative should BMW choose? Why? [1 point]Explanation / Answer
PW of System A=-513000+(275000-180500)/0.08*(1-1/1.08^7)+323000/1.08^7=167469.37
PW of System B=-465000+(247000-123500)/0.08*(1-1/1.08^7)+266000/1.08^7=333195.15
AW of System A=167469.37*0.08/(1-1/1.08^7)=32166.24
AW of System B=333195.15*0.08/(1-1/1.08^7)=63997.59
FW of System A:=167469.37*1.08^7=287013.07
FW of System B:=333195.15*1.08^7=571037.93
Select System B
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