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Q3. A steam generation system at a biomassfueled power plant uses an electrostatic precipitator (ESP) to clean its gaseous effluents. Its initial cost was $90,000 and the current market value is $ 60,000. The system (defender) can work for further five years at the end of which the salvage value will be $10,000. If we install a new ESP (challenger), its initial cost will be $100,000. At the end of five years, its salvage value will be $25,000. Projected operation and maintenance expenses (O&M) indicate the following average expenses per year as a function of the age of the ESP in each case. EOY O&M cost of Challenger ($) 10000 10000 15000 20000 25000 Assuming 12% MARR, determine whether replacement is justified or not. 12345 O&M Cost of Defender ($) 30000 30000 35000 40000 45000

Q3. A steam generation system at a biomassfueled power plant uses an electrostatic precipitator (ESP) to clean its gaseous effluents. Its initial cost was $90,000 and the current market value is $ 60,000. The system (defender) can work for further five years at the end of which the salvage value will be $10,000. If we install a new ESP (challenger), its initial cost will be $100,000. At the end of five years, its salvage value will be $25,000. Projected operation and maintenance expenses (O&M) indicate the following average expenses per year as a function of the age of the ESP in each case. EOY O&M cost of Challenger ($) 10000 10000 15000 20000 25000 Assuming 12% MARR, determine whether replacement is justified or not. 12345 O&M Cost of Defender ($) 30000 30000 35000 40000 45000

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Q3. A steam generation system at a biomassfueled power plant uses an electrostatic precipitator (ESP) to clean its gaseous effluents. Its initial cost was $90,000 and the current market value is $ 60,000. The system (defender) can work for further five years at the end of which the salvage value will be $10,000. If we install a new ESP (challenger), its initial cost will be $100,000. At the end of five years, its salvage value will be $25,000. Projected operation and maintenance expenses (O&M) indicate the following average expenses per year as a function of the age of the ESP in each case. EOY 1 2 3 4 5 O&M cost of Challenger ($) 10000 10000 15000 20000 25000 Assuming 12% MARR, determine whether replacement is justified or not. O&M Cost of Defender ($) 30000 30000 35000 40000 45000
Transcribed Image Text:Q3. A steam generation system at a biomassfueled power plant uses an electrostatic precipitator (ESP) to clean its gaseous effluents. Its initial cost was $90,000 and the current market value is $ 60,000. The system (defender) can work for further five years at the end of which the salvage value will be $10,000. If we install a new ESP (challenger), its initial cost will be $100,000. At the end of five years, its salvage value will be $25,000. Projected operation and maintenance expenses (O&M) indicate the following average expenses per year as a function of the age of the ESP in each case. EOY 1 2 3 4 5 O&M cost of Challenger ($) 10000 10000 15000 20000 25000 Assuming 12% MARR, determine whether replacement is justified or not. O&M Cost of Defender ($) 30000 30000 35000 40000 45000
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