A medium-size municipality plans to develop a software system to assist in project selection during

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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 A (tailored system), B (adapted system), and C (current system). Find the annual worth of life-cycle cost for the best alternative at 8% per year.

Alternative

Component

Cost

A

Development

$925,000 now, $370,000 years 1–4

Programming

$925,000 now, $740,000 years 1, 2

Operation

$185,000 years 1–10

Support

$185,000 years 1–5

B

Development

$185,000 now

Programming

$370,000 year 0, $185,000 years 1–3

Operation

$370,000 years 1–10

Support

$370,000 years 1–10

C

Operation

$925,000 years 1–10