A Clinical Laboratory plans to build a waste water management installation (IPAL) independently. For waste distribution needs, two types of specifications are considered which must be selected according to the conditions: Initial cost of the pipe Technical lifetime of the pipe Initial cost of equipment Technical lifetime of the equipment Energy costs for pumps per year Pipe X $ 1.200 million 60 years $ 150 million 20 years $ 30 million Pipe Y $ 800 million 30 years $ 200 million 20 years $ 40 million ...
A Clinical Laboratory plans to build a waste water management installation (IPAL) independently. For waste distribution needs, two types of specifications are considered which must be selected according to the conditions: Initial cost of the pipe Technical lifetime of the pipe Initial cost of equipment Technical lifetime of the equipment Energy costs for pumps per year Pipe X $ 1.200 million 60 years $ 150 million 20 years $ 30 million Pipe Y $ 800 million 30 years $ 200 million 20 years $ 40 million ...
Chapter1: Making Economics Decisions
Section: Chapter Questions
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
Transcribed Image Text:A Clinical Laboratory plans to build a waste water management installation (IPAL) independently. For waste
distribution needs, two types of specifications are considered which must be selected according to the
conditions:
Initial cost of the pipe
Technical lifetime of the
pipe
Initial cost of equipment
Technical lifetime of the
equipment
Energy costs for pumps
per year
Increase in energy costs
for pumps every year
Pipe X
$ 1.200 million
60 years
$ 150 million
20 years
$ 30 million
$ 0,6 million
Pipe Y
$800 million
30 years
$ 200 million
20 years
$ 40 million
$ 0,8 million
The cost of rejuvenation over 60 years is the same as the initial cost. The analysis period is 60 years, then
compare Equivalent Uniform Annual Cost (X) with Equivalent Uniform Annual Cost (Y) assuming an
analysis interest rate of 10% and a residual value for pipes and equipment is zero.
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