Create a spreadsheet to solve Example 6-11. What would the capital investment amount for pump SP240 have to be such that the firm would be indifferent as to which pump model is selected?

The new processing facility is needed by your firm at least as far into the future as the strategic plan forecasts operating requirements. The MARR is 20% per year. Based on this information, which slurry pump should you select? Solution Notice that the estimates for maintenance expenses involve an arithmetic gradient series (Chapter 4). A cash-flow diagram is very useful in this situation to help keep track of the various cash-flow series. The cash-flow diagrams for pump models SP240 and HEPS9 are shown in Figure 6-12. The repeatability assumption is a logical choice for this analysis, and a study period of either infinite or 45 years (least common multiple of the useful lives) in length can be used. With repeatability, the AW over the initial useful life of each alternative is the same as its AW over the length of either study period: AW(20%)SP240==AW(20%)HEPS==$33,200(A/P,20%,5)$2,165[$1,100+$500(A/G,20%,5)]$15,187$47,600(A/P,20%,9)+$5,000(A/F,20%,9)$1,720[$500(P/A,20%,6)+$100(P/G,20%,6)](P/F,20%,3)(A/P,20%,9)$13,622 Based on Rule 2 (Section 6.2.2), you should select pump model HEPS9, since the AW over its useful life (nine years) has the smaller negative value ($13,622). As additional information, the following two points support in choosing the repeatability assumption in Example 6-11: 1. The repeatability assumption is commensurate with the long planning horizon for the new processing facility and with the design and operating requirements of the catalytic system. The new processing facility is needed by your firm at least as far into the future as the strategic plan forecasts operating requirements. The MARR is 20% per year. Based on this information, which slurry pump should you select? Solution Notice that the estimates for maintenance expenses involve an arithmetic gradient series (Chapter 4). A cash-flow diagram is very useful in this situation to help keep track of the various cash-flow series. The cash-flow diagrams for pump models SP240 and HEPS9 are shown in Figure 6-12. The repeatability assumption is a logical choice for this analysis, and a study period of either infinite or 45 years (least common multiple of the useful lives) in length can be used. With repeatability, the AW over the initial useful life of each alternative is the same as its AW over the length of either study period: AW(20%)SP240==AW(20%)HEPS==$33,200(A/P,20%,5)$2,165[$1,100+$500(A/G,20%,5)]$15,187$47,600(A/P,20%,9)+$5,000(A/F,20%,9)$1,720[$500(P/A,20%,6)+$100(P/G,20%,6)](P/F,20%,3)(A/P,20%,9)$13,622 Based on Rule 2 (Section 6.2.2), you should select pump model HEPS9, since the AW over its useful life (nine years) has the smaller negative value ($13,622). As additional information, the following two points support in choosing the repeatability assumption in Example 6-11: 1. The repeatability assumption is commensurate with the long planning horizon for the new processing facility and with the design and operating requirements of the catalytic system