NEU is planning to replace the central A/C system for the class rooms. In response to their request for proposal, NEU received two proposals. The details of the proposal are given below.
|
|
Company A
|
Company B
|
|
system cost including installation $
|
35,000
|
45,000
|
|
Life in years
|
10
|
10
|
|
Insurance per year $
|
900
|
1,200
|
|
Electricity charge per month $
|
800
|
450
|
|
Maintenance charges per quarter $
|
350
|
300
|
|
System Overhaul - number per year
|
4
|
3 in two years
|
|
Material Cost per overhaul $
|
1,000
|
400
|
|
Number of labor hours per overhaul
|
8
|
3
|
|
Labor rate for overhaul $/hour
|
100
|
100
|
Use life cycle costs to recommend a system for NEU. Show the calculations to support your recommendations.