You are the manager of a large crude-oil refinery. As part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. The replacement and downtimecost in the first year is $165,000. This cost is expected to increase due to inflation at a rate of 9% per year for five years (i.e. until the EOY 6), at which time this particular heat exchanger will no longer be needed. If the company's cost of capital is18% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?Click the icon to view the interest and annuity table for discrete compounding when i = 9 % per year.Click the icon to view the interest and annuity table for discrete compounding when i = 18% per year.You could afford to spend $thousands for a higher quality heat exchanger. (Round to one decimal place.)

Given data: EOY=6 Inflation rate=9% Capital cost=18% Replacement and downtime cost=$165,000 It…

You are the manager of a large crude-oil refinery. As part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. The replacement and down cost in the first year is $165,000. This cost is expected to increase due to inflation at a rate of 9% per year for five years (i.e. until the EOY 6), at which time this particular heat exchanger will no longer be needed. If the company's cost of capi 18% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated? Click the icon to view the interest and annuity table for discrete compounding when /= 9% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 18% per year.

You are the manager of a large crude-oil refinery. As part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. The replacement and down cost in the first year is $165,000. This cost is expected to increase due to inflation at a rate of 9% per year for five years (i.e. until the EOY 6), at which time this particular heat exchanger will no longer be needed. If the company's cost of capi 18% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated? Click the icon to view the interest and annuity table for discrete compounding when /= 9% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 18% per year.

Structural Analysis

6th Edition

ISBN:9781337630931

Author:KASSIMALI, Aslam.

Publisher:KASSIMALI, Aslam.

Chapter2: Loads On Structures

Section: Chapter Questions

Problem 1P

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Question

You are the manager of a large crude-oil refinery. As part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. The replacement and downtime
cost in the first year is $165,000. This cost is expected to increase due to inflation at a rate of 9% per year for five years (i.e. until the EOY 6), at which time this particular heat exchanger will no longer be needed. If the company's cost of capital is
18% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?
Click the icon to view the interest and annuity table for discrete compounding when i = 9 % per year.
Click the icon to view the interest and annuity table for discrete compounding when i = 18% per year.
You could afford to spend $
thousands for a higher quality heat exchanger. (Round to one decimal place.)

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