Asaaap plz n ail ompany must install antipollution equipment in a now refinery t
ID: 1155716 • Letter: A
Question
Asaaap plz n ail ompany must install antipollution equipment in a now refinery to meet fedoral this problem using the ERR metod Late-12% per year. E Click the icon to view the altermatives description. dlean-air standands. Four design altematives are being considered, which wil have capital investment and annual operating Of 11 years for oach design, no market value, a desired MARR of 12% per year, and an prayis periode, 1 1 years wich treiny) should be seedrso- cok the icon to view the interest and annuity table for dscroto crmpondng when i-12% per ye Data Table Which altemative would you choose as a base one? Choose the correct answer below Alternative Deslg ?B.D2 O c. D4 O D. D 800,000 $770,000 $1,230,000 $1,850,000 Capital Investmet Arnual experses 68.00068,000 115,000 122.000 40,000 45,000 60,000 0,000 Analyze the difference between the base altemative and the second-choice ahemative. 650,00010000 420,000 380,000 18.000 22.00028,.00 Taxes and insurance 13,000 Analyze the diference between the oument base altemnative and the third -choice ahternative Print Done ERR ?«L-1-LlrD%, Analyze the dfference between the cument base altemative and the fourth choice atemative Round to one decimal placeExplanation / Answer
In the above question Capital Invest ment and Annual Expeses of Power, Labour, Maintenance and Tax & Insurance are given.
Useful life of each design is 11 years. ERR rate is 12% per year
Capital Invest ment of all four design are as follows;
D1= 600000
D2= 770000
D3= 1230000
D4= 165000
Total Annual Cost
D1= 68000+40000+650000+13000 = 771000
D2= 68000+45000+610000+16000= 739000
D3= 115000+60000+420000+22000= 617000
D4= 122000+50000+380000+28000= 580000
PVAF @12% for 11 yrs = 5.9377 ( this number got from Statistical table)
Present value of Annual Cost of each design is as follows; the formula is PVAF * Total Annual Cost
PV of ANNUAL Cost D1= 771000 * 5.9377 = 4577966.7
PV of ANNUAL Cost D2= 739000 * 5.9377 = 4387960
PV of ANNUAL Cost D3= 617000 * 5.9377 = 3663561
PV of ANNUAL Cost D4= 580000 * 5.9377 = 3443866
Total cost of all design = Total investment + PV of Annual Cost
D1= 600000 + 4577966.7 = 5177966.7 ( Priority 4)
D2= 770000 + 4387960 = 5157960.3 ( Priority 3)
D3= 1230000 + 3663561 = 4893560.9 ( Priority 2)
D4= 165000 + 3443866 = 3608866 ( Priority 1)
D4 have less cost to install and maintain in a better way. so its a base option
Current base & Fourth Alternative = Deviation of 43.48%
Annual Expenses Power 68000 68000 115000 122000 Labour 40000 45000 60000 50000 Maintainance 650000 610000 420000 380000 Taxes & Insurance 13000 16000 22000 28000Related Questions
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