Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:5. There are numerous sub-processes within the overall design. The material has to be
pretreated to breakdown the biomass structure. This will allow enzymes to convert the cellulose
to glucose that can be fermented into chemicals and fuels. There are two pretreatment options:
alkaline and acid. Note the acid option will require 300,000 in year 10 to remove the equipment
due to corrosion and decontamination, which option is most economical at an interest rate of
8%?
Alkaline
Acid
Initial cost
4,000,000
7,000,000
Useful life
10
10
-300,000 (will cost money to be
removed because of the acid)
250,000
Salvage value
Annual operating cost
450,000
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