Dutch Mobile Company is producing jet fuel from crude oil in its refinery in Texas. It is considering the three mutually exclusive alternatives to improve the efficiency of its refinery process. The cash flows for the three alternatives are shown below. Using AW approach and assuming a MARR of 8%, determine which alternative should be selected by Dutch Mobile. Alternative 1 First cost $300,000 Alternative 2 $500,000 Alternative 3 $800,000 AOC $50,000 in Year 1, increasing by $20,000 $30,000 in Year 1, $65,000 increasing by 5% per per year Salvage value $50,000 Life, years $70,000 4 7 10 year $100,000

Dutch Mobile Company is producing jet fuel from crude oil in its refinery in Texas. It is considering the three mutually exclusive alternatives to improve the efficiency of its refinery process. The cash flows for the three alternatives are shown below. Using AW approach and assuming a MARR of 8%, determine which alternative should be selected by Dutch Mobile. Alternative 1 First cost $300,000 Alternative 2 $500,000 Alternative 3 $800,000 AOC $50,000 in Year 1, increasing by $20,000 $30,000 in Year 1, $65,000 increasing by 5% per per year Salvage value $50,000 Life, years $70,000 4 7 10 year $100,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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