Compare the two pumps given in Example 10.7 using the common denominator method. The discrete cash flow diagrams for the two pumps are shown in Figure E10.9. The minimum time over which the comparison can be made is 4(7) = 28 years.

Example 10.7

During the design of a new project, a decision must be made regarding which type of pump should be used for a corrosive service. The options are as follows:

Assume a discount rate of 8% p.a.

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8000 9800 1800 16,000 9800 0 1 2 3 4 5 6 7 8 9 10 1600 9800 17,600 0 1 2 3 4 5 6 7 8 9 10 17,600 9800 14 9800 16 20 17,600 21 9800 Carbon Steel Pump 24 28 Stainless Steel Pump 28 Figure E10.9 Cash Flow Diagrams for the Common Denominator Method Used in Example 10.9