A large textile company is trying to decide which sludge dewatering process it should use ahead of its sludge drying operation. Thecosts associated with centrifuge and belt press systems are shown. Compare them on the basis of their annual worths using aninterest rate of 10% per year.SystemFirst cost, $Centrifuge-250,000-31,000Belt Press-170,000-35,000-26,00010,0004AOC, $/yearOverhaul in year 2, $Salvage value, $Life, yearsThe annual worth of the centrifuge system is $-The system selected on the basis of the annual worth analysis is the (Click to select) ✓ system.40,0006and the annual worth of the belt press system is $-

Answered: A large textile company is trying to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A large textile company is trying to decide which sludge dewatering process it should use ahead of its sludge drying operation. The
costs associated with centrifuge and belt press systems are shown. Compare them on the basis of their annual worths using an
interest rate of 10% per year.
System
First cost, $
Centrifuge
-250,000
-31,000
Belt Press
-170,000
-35,000
-26,000
10,000
4
AOC, $/year
Overhaul in year 2, $
Salvage value, $
Life, years
The annual worth of the centrifuge system is $-
The system selected on the basis of the annual worth analysis is the (Click to select) ✓ system.
40,000
6
and the annual worth of the belt press system is $-

Expert Solution

Step 1

The annual worth analysis is used when the service life of the alternative is not equal. Because the annual worth comparison of the alternative does not depend on service life.

The annual worth is calculated as

$A W = - F C (A / P, i, n) - A O C - O v e r h a u l \cos t (P / F, i, m) (A / P, i, n) + S (A | F, i, n)$

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