Three alternative insulations are being considered for installation on a machine part. After the initial installation, if the insulation fails in any future year, it is replaced byan identical one at a cost lower than the initial cost. The costs and probabilities of failure in any year are given in the table below.Insulationthickness2 inches3 inches6 inchesInitialinstallation cost$900$1,200$1,800Probability of failurein any given year26.7%14.4%6.32%Replacement cost anytimeinsulation fails in future$600$800$1,200If the analysis period is infinte (i.e, N = infinity), calculate the expected EUAC of the 2-inch insulation. The MARR is 11% per year.OA. $414O B. $259O C. $104O D. $155

Three alternative insulations are being considered for installation on a machine part. After the initial installation, if the insulation fails in any future year, it is replaced by an identical one at a cost lower than the initial cost. The costs and probabilities of failure in any year are given in the table below.

Three alternative insulations are being considered for installation on a machine part. After the initial installation, if the insulation fails in any future year, it is replaced by an identical one at a cost lower than the initial cost. The costs and probabilities of failure in any year are given in the table below.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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When MC rises, the value of AVC will also rise. True / False
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Do it propely, correctly.
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