Q. 6 Two separators (2-phase and 3-phase) are being considered for purchase for
ID: 2619423 • Letter: Q
Question
Q. 6 Two separators (2-phase and 3-phase) are being considered for purchase for upgrading the oil production facilities. The following table shows the cost associated of two separators Separator A (2-phase)Sepor B (3-phase) Initial cost and insulation Annual uniform end of year maintenance Overhaul end of year 3 Salvage value Service life time 25,000 S 3,000 S 2,500 S 15,000 S 2,000 S 1.500 4 Years For an annual interest rate of 7 % determined which separator is better for purchasing? Explain your selection Not. Show all calculation and draw Cash Flow DiagramExplanation / Answer
Equated Annual cost = -23533.57 / 4.7665
= -4937.24
Equated Annual cost = -37202.38 / 3.3872
= -10983.20
Seperator A ( 2-Phase) Year 0 1 2 3 4 5 6 Initial cost and insulation -15000 Annual uniform end of year Maintenance -2000 -2000 -2000 -2000 -2000 -2000 Overhaul end of year 3 Salvage value 1500 Net cash flow -15000 -2000 -2000 -2000 -2000 -2000 -500 PVF (7%) 1 0.9346 0.873439 0.816297877 0.762895 0.712986 0.666342 Present value of cash flow -15000 -1869.158879 -1746.88 -1632.595754 -1525.79 -1425.97 -333.171 Net present value -23533.57Related Questions
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