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Now, considering this decision making steps for aneconomic-related estimate to perform an engineering economyanalysis as shown below:
• Defining the objective: Select the most economicalalternative that meets the requirements such as production rate,design specifications.
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• Data and information Collection: Each alternative musthave estimates for life (likely 10 years), Annual operating Costand other costs, first cost, any salvage value, and the MARR(Minimum Acceptable Rate of return). The debt versus equity capitalquestion must be addressed, especially if more than $5 million isneeded
• Search the alternatives: Consider two alternatives Aand B, some of the required data to perform an analysis are givenbelow:
• P and S must be estimated.
• AOC equal to about 8% of P must be verified.
• Training and other cost estimates (annual, periodic, one-time)must be finalized.
• Confirm n = 10 years for life of A and B.
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• MARR will probably be in the 15% to 18% per year range
• Estimate of alternatives and develop criteria for decisionmaking: Can use either present worth or annual worth to selectbetween A and B.
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Therefore, the above shown is an economic-related estimate toperform an engineering economic analysis for the president.