D | Question 4 0.5 pts Springfield is planning to build a new water treatment fa

Question

D | Question 4 0.5 pts Springfield is planning to build a new water treatment facility. The first cost of the facility will be $854036. Annual maintenance and repairs will be $19545 for each of the first 5 years, increase to $35739 for each of the next 10 years, and increase again to $60385 for each of the next 5 years. Springfield is also planning for a major overhaul at the end of 10 years which is estimated to cost $185054 and another minor overhaul at the end of 17 years which is estimated to cost $28777. Using an interest rate of 2.5%, what is the equivalent uniform annual cost (EUAC) for this system? Enter your answer in this format: 12345 Round your answer. Do not use a dollar sign ("$"), any commas (") or a decimal point.

Explanation / Answer

First, we compute the Present Worth (PW) of the costs as follows.

Note that PV Factor in year N = (1.025)-N

EUAC ($) = PW / PVIFA(2.5%, 20) = 1578478 / 15.5892**

= 101255

**PVIFA(r%, N) = [1 - (1 + r)-N] / r

PVIFA(2.5%, 20) = [1 - (1.025)-20] / 0.025 = (1 - 0.6103) / 0.025 = 0.3897 / 0.025 = 15.5892

Year Cost ($) PV Factor @2.5% Discounted Cost ($) (A) (B) (A) x (B) 0 854036 1.0000 854036 1 19545 0.9756 19068 2 19545 0.9518 18603 3 19545 0.9286 18149 4 19545 0.9060 17707 5 19545 0.8839 17275 6 35739 0.8623 30818 7 35739 0.8413 30066 8 35739 0.8207 29333 9 35739 0.8007 28617 10 220793 0.7812 172483 11 35739 0.7621 27238 12 35739 0.7436 26574 13 35739 0.7254 25926 14 35739 0.7077 25293 15 35739 0.6905 24677 16 60385 0.6736 40677 17 89162 0.6572 58597 18 60385 0.6412 38717 19 60385 0.6255 37772 20 60385 0.6103 36851 PW ($) = 1578478

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.