Standalone engineering alternatives: when evaluating mutually exclusive solutions (e.g., buy vs. refurbish), which cost elements and financial parameters should be included in the economic analysis?

Introduction / Context:
Engineering economy compares alternatives on a consistent financial basis over a common study period. A complete analysis requires more than just the initial purchase price; it must consider the time value of money, operating costs, service life, and terminal values. This question checks whether you can identify the full set of inputs for life-cycle cost or present-worth/annual-worth comparisons.

Given Data / Assumptions:

• Alternatives are standalone and mutually exclusive (choose one).
• Project cash flows occur over a finite life with known or estimated timing.
• An investor's required rate of return (interest rate) is specified.

Concept / Approach:
Key methods include Present Worth (PW), Annual Worth (AW), and Equivalent Uniform Annual Cost (EUAC). Each requires the initial cost (first cost), annual operating and maintenance (O&M) costs, the asset life (n), and salvage value (SV). Discounting all cash flows at the required rate i ensures a like-for-like comparison across alternatives of differing timing and amounts.

Step-by-Step Solution:

Verification / Alternative check:

Why Other Options Are Wrong:

Common Pitfalls:

Final Answer: