Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 11

PGM Consulting is under contract to Montgomery County for evaluating alternatives that use a robotic, liquid-propelled "pig" to periodically inspect the interior of buried potable water pipes for leakage, corrosion, weld strength, movement over time, and a variety of other parameters. Two equivalent robot instruments are available. Robot Joeboy will have a first cost of $85,000, annual M O costs of $30,000, and a $40,000 salvage value after 3 years. Robot Watcheye will have a first cost of $125,000, annual M O costs of $27,000, and a $33,000 salvage value after its 5-year life. Assume an interest rate of 8% per year.
a) Which robot is the better economic option
b) Using the spreadsheet Goal Seek tool, determine the first cost of the robot not selected in
a) so that it will be the economic selection.