Standby power for pumps at water distribution booster stations can be provided by either gasoline-or diesel-powered engines.

Question:

Standby power for pumps at water distribution booster stations can be provided by either gasoline-or diesel-powered engines. The costs for the gasoline engines are as follows:

Gasoline

First cost, $ ............................ – 150,000

Annual M&O, $ per year ...... –41,000

Salvage value, $ .................... 23,000

Life, years .............................. 15

The incremental PW cash flow equation associated with (diesel – gasoline) is 0 = – 40,000 + 11,000(P/A, i, 15) + 16,000(P/F, i, 15)

Determine the following:

(a) First cost of the diesel engines

(b) Annual M&O cost of the diesel engines

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