Welcome to MunInsight, Canadas largest consulting firm dedicated to helping municipalities make strategic decisions using best practices in engineering economics and project management.

As an entry-level project engineer, you will be working remotely for the first few months of your job. But you are still an essential part of the MunInsight team. Weve been asked by the City of Saskatoon to choose between two new water reclamation options. Theyve provided us with a fairly complete set of documents, so you dont need to look around for information beyond whats included here. The turn-around for this assignment is fairly tight 72 hours. But that should be more than enough time for you to complete your calculations and develop some guidance for the City of Saskatoon. Remember, this is your first impression for us, and our first impression for the client, so take the time to edit and fine-tune your language. Ive provided you with fairly strict word limits. They dont have a lot of time to read the details, so make sure you explain the necessary information succinctly. That will mean a bit of time editing your text to make sure it is informative and clear.

For your first assignment, youve been tasked with comparing the following two processes. The table summarizes the costs associated with each.

	Process A	Process B
First Cost	$500,000	$700,000
Salvage	$65,000	$80,000
Annual Savings	$48,000	$60,000
Maintenance	$3000 every 3 years	$1000 occurs every other year, starting the first year and increases by $500 each time
Service Life	18	16

a) Both processes provide water that is up to Canadas national standards. However, Process B exceeds these standards, but its difficult to quantify how much this higher quality water is worth. How would you advise the City of Saskatoon to incorporate this difference in quality in their decision?

b) The City of Saskatoon prefers using payback period to evaluate these two investments. Its been a while since I took engineering economics, and I know that payback period is a popular method with clients, but I would like for you to do some digging around and make sure this method is the right way to compare these two options. Please compare payback period to other comparison methods and describe its advantages and disadvantages.

c) Repeat the comparison of processes A and B using Equivalent Uniform Annual Cost (EUAC), assuming an interest rate of 4%. In the space below, show your calculations using factor notation, e.g. (P/F,i,n).