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Q1. (25 points) A contractor is considering the following three alternatives: Purchase a new computer system for $15,000. The systems is expected to last 6 years with a salvage value of $1,000. Lease a new computer system for $3,000 per year, payable in advance (at the start of the year). The system should last for 6 years. Purchase a used computer system for $8,200. It is expected to last 3 years with no salvage value. a. b. c. If a MARR of 8% is used, which alternative should be selected using a net present worth analysis? which alternative would you select using an annualized cost method of analysis? *(HINT) Since the life of Option C is less than 6 years, you need to use the multiple lives method (or the LCM method that we briefly talk about in class) to bring it up to 6 years. In order to do that, you will need to do is consider that you will be purchasing a second used computer at the end of three years for the same price ($8,200 in year three). *(HINT 2) Use cash flow diagrams to present your calculations and working. Q1. (25 points) A contractor is considering the following three alternatives: Purchase a new computer system for $15,000. The systems is expected to last 6 years with a salvage value of $1,000. Lease a new computer system for $3,000 per year, payable in advance (at the start of the year). The system should last for 6 years. Purchase a used computer system for $8,200. It is expected to last 3 years with no salvage value. a. b. c. If a MARR of 8% is used, which alternative should be selected using a net present worth analysis? which alternative would you select using an annualized cost method of analysis? *(HINT) Since the life of Option C is less than 6 years, you need to use the multiple lives method (or the LCM method that we briefly talk about in class) to bring it up to 6 years. In order to do that, you will need to do is consider that you will be purchasing a second used computer at the end of three years for the same price ($8,200 in year three). *(HINT 2) Use cash flow diagrams to present your calculations and working

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