Which process line should be built for a new chemical? The expected market for the chemical is 20 years. An 12% rate is used to evaluate new process facilities, which are compared with present worth. How much does the better choice save? First Cost O & M Cost Salvage Ufe (years) $18M SSM S4M 10 25M 6M 201 B Solution 1. To equate the lives we will replace alternative at the end of year with an identical process 2. Calculate present worth for 2 alternatives with analysis period n= OPWCA M PWC = M 3. Total money saved M by selecting alternative Which process line should be built for a new chemical? The expected market for the chemical is 20 years. An 12% rate is used to evaluate new process facilities, which are compared with present worth. How much does the better choice save? First Cost 0 & M CostSalvage Ufe (years) A $18M SSM SAM 10 25M 3M 6M 20 B with an identical process. Solution: at the end of year 1. To equate the lives we will replace alternativ B A sis period na 2. Calculate present worth for 2 alternatives w M PWCA M PWCA M by selecting alternative 3. Total money saved - Which process line should be built for a new chemical? The expected market for the chemical is 20 years. An 12% rate is used to evaluate new process facilities, which are compared with present worth. How much does the better choice save? First Cost O & M CostSalvage ufe years) A S18M SSM SAM 10 B 25M 6M 20 Solution: 3M 1. To equate the lives we will replace alternative at the end of year with an identical process. 2. Calculate present worth for 2 alternatives with analysis period na o PWCA M PWCB M 3. Total money saved = M by selecting alternativ B