An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $40,000 the first year, but process improvements will allow the costs to decline by $4,000 each year. As an alternative, an outside company will process the wastes for the fixed price of $20,000/year throughout the 7 year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 7 years. Use the annual worth method to determine how the wastes should be processed. The company's MARR is 12%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year The AW of the in-house treatment is 5 (Round to the nearest dollar) COTS

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $40,000 the first
year, but process improvements will allow the costs to decline by $4,000 each year. As an alternative, an outside company will process the wastes for the fixed price
of $20,000/year throughout the 7 year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 7 years. Use the annual
worth method to determine how the wastes should be processed. The company's MARR is 12%.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year.
The AW of the in-house treatment is $ (Round to the nearest dollar)
GOTR
Transcribed Image Text:An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $40,000 the first year, but process improvements will allow the costs to decline by $4,000 each year. As an alternative, an outside company will process the wastes for the fixed price of $20,000/year throughout the 7 year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 7 years. Use the annual worth method to determine how the wastes should be processed. The company's MARR is 12%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. The AW of the in-house treatment is $ (Round to the nearest dollar) GOTR
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