Oil from a specific type of marine microalgae can be converted into biodiesel that may serve as an alternate transportable fuel for automobiles and trucks. If lined ponds are used to grow the algae, the construction cost is $9.00 million and the M&O cost is estimated at $2.100 million per year. Alternatively, if long plastic tubes are used for growing the algae, the initial cost will be higher at $18.00 million, but less contamination will render the M&O cost lower at $0.300 million per year. At an interest rate of 10.00% per year and a 5-year project period, which system is better-ponds or tubes? Use a present worth analysis. (Round the final answers to three decimal places.) (Include a minus sign if necessary.) The present worth of lined ponds is $ million and that of plastic tubes is $ million. (Click to select) ✓ are used to grow algae. (Click to select) Lined ponds Plastic tubes

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 1.1CE
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Oil from a specific type of marine microalgae can be converted into biodiesel that may serve as an alternate transportable fuel for
automobiles and trucks. If lined ponds are used to grow the algae, the construction cost is $9.00 million and the M&O cost is estimated
at $2.100 million per year. Alternatively, if long plastic tubes are used for growing the algae, the initial cost will be higher at $18.00
million, but less contamination will render the M&O cost lower at $0.300 million per year. At an interest rate of 10.00% per year and a
5-year project period, which system is better-ponds or tubes? Use a present worth analysis. (Round the final answers to three decimal
places.) (Include a minus sign if necessary.)
The present worth of lined ponds is $
million and that of plastic tubes is $
million.
(Click to select) ✓ are used to grow algae.
(Click to select)
Lined ponds
Plastic tubes
Transcribed Image Text:Oil from a specific type of marine microalgae can be converted into biodiesel that may serve as an alternate transportable fuel for automobiles and trucks. If lined ponds are used to grow the algae, the construction cost is $9.00 million and the M&O cost is estimated at $2.100 million per year. Alternatively, if long plastic tubes are used for growing the algae, the initial cost will be higher at $18.00 million, but less contamination will render the M&O cost lower at $0.300 million per year. At an interest rate of 10.00% per year and a 5-year project period, which system is better-ponds or tubes? Use a present worth analysis. (Round the final answers to three decimal places.) (Include a minus sign if necessary.) The present worth of lined ponds is $ million and that of plastic tubes is $ million. (Click to select) ✓ are used to grow algae. (Click to select) Lined ponds Plastic tubes
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