Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 6

A medium-size municipality plans to develop a software system to assist in project selection during the next 10 years. A life-cycle cost approach has been used to categorize costs into development, programming, operating, and support costs for each alternative. There are three alternatives under consideration, identified as M, N, and O. The costs are summarized below. Use an annual life-cycle cost approach to identify the best alternative at 8% per year.