Engineering economic Solution Average Cost for Shutdown =400000*0.7+600000*0.3 46000 Probability of Loss =1800000*0.39 702000 =2000000*0.095 190000 =3200000*0.01 32000 Since the probability of loss on investment in a 90% exchange is minimum and also less than the average cost of shutdown, so 90% of landlines should be exchange.

1. Engineering economic
Solution
Average Cost for Shutdown =400000*0.7+600000*0.3 46000 Probability of Loss
=1800000*0.39 702000 =2000000*0.095 190000 =3200000*0.01 32000 Since
the probability of loss on investment in a 90% exchange is minimum and also less than the
average cost of shutdown, so 90% of landlines should be exchange