Ultrapure water (UPW) is an expensive commodity for the semiconductor industry. With the options of seawater or groundwater sources, it is a good idea to determine if one system is more economical than the other. Use a minimum accepted rate of return 12.5% per year and the present worth method to select one of the systems. Having the following assumptions with 10 years of economic life, UPW needs 1000 gallons/60seconds, and operating time of 14 hours per day of 200 days per year. Which option you would recommend as source? Refer to the table provided.

TABLE:

Source

equipment first cost, $M: Seawater= -20 Groundwater=-22

annual operating cost $M per year: Seawater= -0.5 Groundwater=-0.3

Scrap value: percentage of first cost: Seawater=5 Groundwater=10

Cost of UPW, $ per 800 gallons: Seawater=4 Grounwater=5