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answer the following question asap for thumbs up An engineer is trying to decide which process to use to increase the efficiency of an oil
answer the following question asap for thumbs up
An engineer is trying to decide which process to use to increase the efficiency of an oil refinery. Option 1 will cost $250,000 to buy and $85,000 per year to operate. Some romponents will further be replaced one time per year at a cost of $5500. Option 2 will cost $300,000 to buy and $119,000 per year to operate, but will result in a sludge hauling cost to the monofill of $37,000 per year less than that of Option 1. The useful lives are 3 and 4 years for Options 1 and 2 , respectively. The salvage values are calculated for each option using the following schedule: Using an interest rate of 15%, determine the better alternative by: a) Using the PW Analysis with an infinite planning horizon. (16 Points) b) Using the PW Analysis with a 10-year study period. (14 Points) c) Using the AW Analysis considering the useful life of each alternative. Comment on the results. (10 Points) An engineer is trying to decide which process to use to increase the efficiency of an oil refinery. Option 1 will cost $250,000 to buy and $85,000 per year to operate. Some romponents will further be replaced one time per year at a cost of $5500. Option 2 will cost $300,000 to buy and $119,000 per year to operate, but will result in a sludge hauling cost to the monofill of $37,000 per year less than that of Option 1. The useful lives are 3 and 4 years for Options 1 and 2 , respectively. The salvage values are calculated for each option using the following schedule: Using an interest rate of 15%, determine the better alternative by: a) Using the PW Analysis with an infinite planning horizon. (16 Points) b) Using the PW Analysis with a 10-year study period. (14 Points) c) Using the AW Analysis considering the useful life of each alternative. Comment on the results. (10 Points) Step by Step Solution
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