Reference no: EM133045470

Question - Conduct three-estimate sensitivity analysis using the AW analysis to choose a better alternative. An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $18,000 per year. In addition, an extra $16.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 75 days per year? The MARR is 11% per year.