Review Course Section Quiz 17

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0.1     Using Equivalent Uniform Annual Cost (EUAC), which of the following pieces of equipment is the best choice if the annual interest rate is 3.5%?
System 1: cost of equipment = $8750, useful life = 10 years, annual maintenance costs = $1000
System 2: cost of equipment = $10,000, useful life = 11 years, annual maintenance costs = $750
System 3: cost of equipment = $14,500, useful life = 14 years, annual maintenance costs = $250
System 4: cost of equipment = $9,250, useful life = 10 years, annual maintenance costs = $475
2. A contractor is offering the following to the owner:
Alternate 1: Cost = $2,750; Annual maintenance costs = $100; Useful life expectancy = 2 years
Alternate 2: Cost = $5,750; Annual maintenance costs = $200; Useful life expectancy = 7 years
Alternate 3: Cost = $12,000; Annual maintenance costs = $225; Useful life expectancy = 13 years
Alternate 4: Cost = $18,500; Annual maintenance costs = $300; Useful life expectancy = 20 years
Which alternate provides the lowest cost benefit if the annual interest rate is 5%?

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