6-13. The alternatives for an engineering project to recover most of the energy presently being lost in the primary cooling stage of a chemical processing system have been reduced to three designs. The estimated capital investment amounts and annual expense savings are as follows:

Assume that the MARR is 12% per year, the study period is six years, and the market value is zero for all three designs.

Design EOY ER1 ER2 ER3 0 −$98,600 −$115,000 −$81,200 1 25,800 29,000 19,750 2 3 ⏐ ⏐ ⏐ ⏐ ⏐ ⏐ ⏐  ¯f = 6%a ⏐ ⏐ ⏐ ⏐ ⏐ ⏐ ⏐  G = $150b ⏐ ⏐ ⏐ ⏐ ⏐ ⏐ ⏐  c 4 5 6 34,526 29,750 19,750 a After year one, the annual savings are estimated to increase at the rate of 6% per year. b After year one, the annual savings are estimated to increase $150 per year. c Uniform sequence of annual savings. Apply an incremental analysis method to determine the preferred alternative. (6.4)