Question

Interest and MARR Interest is expected to be 10% per year unless stated otherwise Time 13 weeks in a quarter, 52 weeks in a year, 4 quarters in a year, 3 months per quarter Company 1: Ode to Engineering Engineering Company Inc OEECI seeks to offset the staffing and human resources needs of companies through their modern, artificially intelligent robotic systems. Savings can be found by replacing humans in terms of cost, sustainability, and zer complaints about being left behind on a foreign planet. Robotic System Purchase Cost $8M Heuristically programmed ALgorithmic computer (HAL) 9000 $2M TARS Wall-E $550K $220K Bender Perceived costs and revenues from each product as seen over 8 years: Robotic System Revenue / year $62K AOC $50K in year 1 + $1M/yr after that Heuristically programmed ALgorithmic computer (HAL) 9000 $72K TARS $1.2M in year 1 $800/yr after that $50K $120K Wall-E Bender $30K $40K

Answer 1

let i% be the ROR, then NPW of HAL 9000 at i%

NPW = -8m + 50K*(P/A, i%,10) - 62K*(P/A, i%,10) + 1m*(P/G, i%,10) + 33K*(P/F, i%,10) = 0

-8m + (50K - 62K)*(P/A, i%,10) + 1m*(P/G, i%,10) + 33K*(P/F, i%,10) = 0

Therefore correct option is b.