Systems engineering and analysis

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A used automobile can be purchased by a student to provide transportation to and from university for $12,000 as-is (i.e. without warranty). First year maintenance cost is expected to be $1,200 and the maintenance costs will increase by $120 per year thereafter. Operation costs for the automobile will be $6,000 for every year the automobile is used and its salvage value decreases by 12 % per year. i) What is the economic life without considering the varying value of money over time? ii) What is the economic life if the rate of interest is 5%? Solve it (based on problems in the text, Blanchard and Fabrycky, “Systems Engineering and Analysis”, Prentice-Hall, 5th Edition, 2011)

Reference no: EM131081524

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