A steam generator is needed in the design of new mini-power plant. This generator can be purchased with two different specification proposals, A or B. Proposal A has life of 15 years, a first cost of RM45,000 to buy with estimated an annual saving of RM3,500 per year and estimated for an annual operating & maintenance cost of RM750 per year. A salvage value of RM10,700 and one-off overhaul in year 9 that cost RM 1,500. Proposal B has a life 15 years, a first cost of RM50, 000 to buy with estimated an annual saving of RM1,700per year and estimated for an annual operating & maintenance cost of RM800 per year. A salvage value of RM25, 000 and one-off overhaul in year 12 that cost RM1, 500. Propose which specification should be chosen using multiple attribute present worth, PW if a firm use an interest rate of 0.25%? Stated the preferred proposal based on this analysis.
A steam generator is needed in the design of new mini-power plant. This generator can be purchased with two different specification proposals, A or B. Proposal A has life of 15 years, a first cost of RM45,000 to buy with estimated an annual saving of RM3,500 per year and estimated for an annual operating & maintenance cost of RM750 per year. A salvage value of RM10,700 and one-off overhaul in year 9 that cost RM 1,500. Proposal B has a life 15 years, a first cost of RM50, 000 to buy with estimated an annual saving of RM1,700per year and estimated for an annual operating & maintenance cost of RM800 per year. A salvage value of RM25, 000 and one-off overhaul in year 12 that cost RM1, 500. Propose which specification should be chosen using multiple attribute present worth, PW if a firm use an interest rate of 0.25%? Stated the preferred proposal based on this analysis.
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