Chemical processing corporation is considering three methods to dispose of a non- hazardous chemical sludge: land application, fluidized-bed incineration, and private disposal contract. The estimates for each method are shown. Land Incineration Contract First cost, RM Annual Operating Cost, RM per year Salvage value, RM Life, years Application 130,000 95,000 900,000 60,000 300,000 120,000 25,000 3 2 a. Determine which has the least cost on the basis of a present worth comparison at 10% per year. b. If the contract award cost increases by 20% every 2-year renewal, analyse whether the decision will change.

Chemical processing corporation is considering three methods to dispose of a non- hazardous chemical sludge: land application, fluidized-bed incineration, and private disposal contract. The estimates for each method are shown. Land Incineration Contract First cost, RM Annual Operating Cost, RM per year Salvage value, RM Life, years Application 130,000 95,000 900,000 60,000 300,000 120,000 25,000 3 2 a. Determine which has the least cost on the basis of a present worth comparison at 10% per year. b. If the contract award cost increases by 20% every 2-year renewal, analyse whether the decision will change.

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

Subject : Economy and Engineering Management

Chemical processing corporation is considering three methods to dispose of a non-
hazardous chemical sludge: land application, fluidized-bed incineration, and private
disposal contract. The estimates for each method are shown.
Land
Incineration
Contract
First cost, RM
Annual Operating Cost, RM per year
Salvage value, RM
Life, years
Application
130,000
95,000
25,000
900,000
60,000
300,000
120,000
3
2
a. Determine which has the least cost on the basis of a present worth comparison
at 10% per year.
b. If the contract award cost increases by 20% every 2-year renewal, analyse
whether the decision will change.

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