"An aircraft control actuator is part of the flight control system that enables an airplane to fly. It is important that the actuators are reliable. Reliability can be defined as the probability a system is functioning, so it is a number between 0 and 1. The development and installation cost as a function of reliability equals [$1650+ $13904*(In R)], which will be paid immediately. Maintenance on the actuator will occur in year 7 and in year 10. In each year the maintenance cost as a function of reliability R is [$1480/ln(1.45R)]. Assume the interest rate is 12%.
What is the difference in discounted lifecycle costs ($) if the reliability is 0.93 and 0.96? Enter your answer as a positive number. NOTE: A decision maker who is responsible for determining what the reliablility should be for the actuator can consider whether increasing the reliability is worth the additional cost."
"Consider two mutually exclusive projects that will be conducted for a total of 6 years. Project A lasts 3 years (so it will need to be repeated 1 time) and has the following cash flow:
Year 0 -$25,000;
Year 1 $12,000;
Year 2 $20,000;
Year 3 $15,000.
Project B lasts 2 years (so it will need to be repeated 2 times) and has the following cash flow:
Year 0 -$28,000;
Year 1 $18,000;
Year 2 $20,000.
Assume both projects can be repeated with the identical cash flows. The interest rate is 17.7%. Provide the net present worth for 6 YEARS of the project that you should select. If neither project should be selected, enter 0."