You are the FPE at a petroleum plant and are overseeing the design and installation of a new fire pump. There are two separate options an electric pump and a diesel pump. The electric pump includes an initial investment of $5,000,000 with a yearly maintenance of $150,000. The diesel pump includes an initial investment of $3,500,000 with a yearly maintenance of $400,000. Assume both pumps have a life expectancy of 10 years and the interest rate is 6%. Which system is the most desirable? The electric pump because it costs approximately $340,000 less than the diesel pump. The electric pump because it costs approximately $520,000 less than the deisel pump. The diesel pump because it costs approximately $520,000 less than the electric pump. The diesel pump because it costs approximately $340,000 less than the electric pump.
-
You are the FPE at a petroleum plant and are overseeing the design and installation of a new fire pump. There are two separate options an electric pump and a diesel pump. The electric pump includes an initial investment of $5,000,000 with a yearly maintenance of $150,000. The diesel pump includes an initial investment of $3,500,000 with a yearly maintenance of $400,000. Assume both pumps have a life expectancy of 10 years and the interest rate is 6%. Which system is the most desirable?
The electric pump because it costs approximately $340,000 less than the diesel pump.
The electric pump because it costs approximately $520,000 less than the deisel pump.
The diesel pump because it costs approximately $520,000 less than the electric pump.
The diesel pump because it costs approximately $340,000 less than the electric pump.
To determine the most desirable options an electric pump or a diesel pump; the present worth of both systems should be calculated
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
