Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 5, Problem 57P
To determine

Calculate the present worth.

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5-S2 A new recycling sorting and processing line is proposed to serve a medium size city. The installed cost of the new line is $2,400,000. The residual value after ten years is estimated at $480,000. The unit would produce recycled material ready for resale at a rate of $0.15/pound, and would run for ten years. How much recyclable material must be generated every year to justify the project (i.e., for the present value of the project to be positive). Use an interest rate of 9%.
Answer is 296,611. Please show solution.
A)Two options of feed-water storage installation are being considered to serve over 20 years of useful life: Option 1: Build a 20,000-gallon tank on a tower. The cost of installing the tank and tower is estimated to be $170,000. The annual operating and maintenance cost after tax adjustment is estimated to be $2,000. The salvage value is estimated to be negligible. Option 2: Place a 20,000-gallon tank of equal capacity on a hill near the refinery. The cost of installing the tank on the hill, including the extra length of service lines, is estimated to be $120,000 with negligible salvage value. The annual operating and maintenance cost of the water tank is estimated to be $1,500 after tax adjustment. Because of the location, an additional investment of 13,000 in pumping equipment is required. The pumping equipment is expected to have a service life of 10 years with a salvage value of $2,000 at the end of that time. The annual operating and maintenance cost (including any incometax…
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