View Policies Current Attempt in Progress A new waste disposal plant is to be built in Hot Springs. Two designs are under consideration. The installation for the conventional design is estimated to cost $29.5 million. Experience with plants having similar designs require major replacement and renovation (R&R) after 8 years at an estimated cost of $13.5 million. Annual operating and maintenance (O&M) cost the first year is projected to be approximately $8.5 million; thereafter, O&M costs are anticipated to increases at a rate of 7% per year. A second design has been suggested. It incorporates new technology, resulting in reduced maintenance costs and a much longer life. Specifically, major R&R will not be required for 15 years, at which time an investment of $24 million will be required. The first cost for the new design is substantially greater than the conventional design: $82 million. O&M cost the first year is projected to be $6 million, it is expected to increase annually at a compound rate of 2%. Assuming the conventional design will incur the same R&R and O&M cost pattern on an 8-year cycle forever and the new design will incur the same R&R and O&M cost pattern on a 15-year cycle forever, using a capitalized cost analysis which design is preferred if the MARR is 5%? Click here to access the TVM Factor Table calculator, Capitalized cost Conventional design $ million New design $ million Carry all interim calculations to 5 decimal places and then round your final answers to 2 decimal places. Please enter your answers in millions of dollars. The tolerance is +0.03. New design is preferred View Policies Current Attempt in Progress A new waste disposal plant is to be built in Hot Springs. Two designs are under consideration. The installation for the conventional design is estimated to cost $29.5 million. Experience with plants having similar designs require major replacement and renovation (R&R) after 8 years at an estimated cost of $13.5 million. Annual operating and maintenance (O&M) cost the first year is projected to be approximately $8.5 million; thereafter, O&M costs are anticipated to increases at a rate of 7% per year. A second design has been suggested. It incorporates new technology, resulting in reduced maintenance costs and a much longer life. Specifically, major R&R will not be required for 15 years, at which time an investment of $24 million will be required. The first cost for the new design is substantially greater than the conventional design: $82 million. O&M cost the first year is projected to be $6 million, it is expected to increase annually at a compound rate of 2%. Assuming the conventional design will incur the same R&R and O&M cost pattern on an 8-year cycle forever and the new design will incur the same R&R and O&M cost pattern on a 15-year cycle forever, using a capitalized cost analysis which design is preferred if the MARR is 5%? Click here to access the TVM Factor Table calculator, Capitalized cost Conventional design $ million New design $ million Carry all interim calculations to 5 decimal places and then round your final answers to 2 decimal places. Please enter your answers in millions of dollars. The tolerance is +0.03. New design is preferred
