oil pipeline has been in service for 5 years. A mechanical engineer working for the oil company is evaluating whether to replace the pipeline with a new one. The data for the existing pipeline and the potential new pipeline are listed in the table. Using an interest rate of 6% and net present worth analysis and then equivalent uniform annual worth analysis, the mechanical engineer determine whether the existing pipeline should be replaced with the proposed new pipeline. Table: Data for Pipeline Alternatives (PLS DON'T USE EXCEL SHOW STEP BY STEP SOLITION ICL UDING FORMI TT A TILANKS

oil pipeline has been in service for 5 years. A mechanical engineer working for the oil company is evaluating whether to replace the pipeline with a new one. The data for the existing pipeline and the potential new pipeline are listed in the table. Using an interest rate of 6% and net present worth analysis and then equivalent uniform annual worth analysis, the mechanical engineer determine whether the existing pipeline should be replaced with the proposed new pipeline. Table: Data for Pipeline Alternatives (PLS DON'T USE EXCEL SHOW STEP BY STEP SOLITION ICL UDING FORMI TT A TILANKS

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Management by Exception

A manager’s job is a very tough one. A manager needs to look at the various areas of work and as a manager he has to look after two or more important jobs or activities at the same time for the growth of the business. In order to do all these things in an effective manner, a manager must adopt or practice different management styles and tactics.

Question

An oil pipeline has been in service for 5 years. A mechanical engineer working for
the oil company is evaluating whether to replace the pipeline with a new one.
The data for the existing pipeline and the potential new pipeline are listed in the
table. Using an interest rate of 6% and net present worth analysis and then
equivalent uniform annual worth analysis, the mechanical engineer determine
whether the existing pipeline should be replaced with the proposed new pipeline.
Table: Data for Pipeline Alternatives (PLS DON'T USE EXCEL SHOW STEP BY STEP
SOLUTION ICLUDING FORMULA THANKS)
Cost
Existing Pipeline
Proposed Pipeline
Initial cost
$300,000.00
Salvage value
$1,000,000 increases
@ time zero
each replacement every
10 years by $500,000 per
year
Yearly maintenance
$100,000 per year increasing
$100,000/y
by $50,000 per year for 10yrs
increasing by
$10,000/yr
Life in yearS
10
40

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