3. Detroit Edison Power (DE Tort Edison Power (DEP) power plant has to come in compliance with the new mercury standards bu dards by reducing its current annual mercury emission rate of 300 tons to 100 tons/year. s considering the following options to come in compliance. Assume that regulations are likely to change after four years so DEP planning only for next 4 years. It is considering the following a. Install Elu install Flue gas scrubbers (EGS) on its boiler FGS reduce mercury emissions by absorbing mercury in exhaust flue gases, FGS requires a capital investment of $800,000 m year zero and has a life of four years Annual costs of operating FGS are estimated at $100,000 per year. Install Electrostatic Precipitators (ESP) on the boilers. ESPs capture mercury particles along with other particulates, ESPs cost $400.000 to install and have a life of four years. ESPs also need electricity to run, which results in increased coal consumption in boilers of 5000 tons/year to supply the same amount of electricity, Coal prices are $ 50/ton and expected to remain at that level for the next four years, Collecting and disposing the particulates captured by ESPs is expected to increase annual operating costs by $10,000. Continue to operate as usual, but buy mercury emission permits from the market each year. The permit prices are expected to be $1600 per ton in year 1 and increase at the rate of 10% year. Which option should DEP choose? DEP uses a discount rate of 10% in its decisions. DEP is subject to 40% income taxes, and depreciation is charged at the rate of 25% of the initial capital investment each year? Please show all your intermediate steps and calculations clearly. Name 3. Detroit Edison Power (DEP) power plant has to come in compliance with the new mercury Standards by reducing its current annual mercury emission rate of 300 tons to 100 tons year It is considering the following options to come in compliance. Assume that regulations are likely to change after four years, so DEP planning only for next 4 years a. Install Flue gas scrubbers (FGS) on its boiler, FGS reduce mercury emissions by absorbing mercury in exhaust flue gases. FGS requires a capital investment of $800,000 in year zero and has a life of four years. Annual costs of operating FGS are estimated at $100.000 per year. b. Install Electrostatic Precipitators (ESP) on the boilers. ESPs capture mercury particles along with other particulates. ESPs cost $400,000 to install and have a life of four years. ESPs also need electricity to run, which results in increased coal consumption in boilers of 5000 tons/year to supply the same amount of electricity. Coal prices are $ 50/ton and expected to remain at that level for the next four years, Collecting and disposing the particulates captured by ESPs is expected to increase annual operating costs by $10,000. c. Continue to operate as usual, but buy mercury emission permits from the market each year. The permit prices are expected to be $1600 per ton in year 1 and increase at the rate of 10% year. Which option should DEP choose? DEP uses a discount rate of 10% in its decisions. DEP is subject to 40% income taxes, and depreciation is charged at the rate of 25% of the initial capital investment each year? Please show all your intermediate steps and calculations clearly. 200,000
