A manufacturer has been ordered by the City of New York City to stop discharging

Question

A manufacturer has been ordered by the City of New York City to stop discharging waste liquids into the city sewer system. You are the engineer responsible to make a decision to select one of the following

Assuming the system is expected to last and be used for 20 years and money is worth 8%, which system should be purchased?

a) Calculate the EUAC for the System A.

b) Calculate the EUAC for the System B.

c) Calculate the EUAC for the System C.

d) Which plan should be adopted? Why?

Annual Installed CostOperating Cost $30,000.00$ 6,000.00$ 2,000.00 $35,000.00 S5,000.00 5,000.00 $80,000.00$1,000.00 40,000.00 System

Explanation / Answer

(a) EUAC, System A ($) = 30,000 x A/P(8%, 20) + 6,000 - 2,000 x P/F(8%, 20) x A/P(8%, 20)

= 30,000 x 0.1019** + 6,000 - 2,000 x 0.2145** x 0.1019**

= 3,057 + 6,000 - 44

= 9,013

(b) EUAC, System A ($) = 35,000 x A/P(8%, 20) + 5,000 - 5,000 x P/F(8%, 20) x A/P(8%, 20)

= 35,000 x 0.1019** + 5,000 - 5,000 x 0.2145** x 0.1019**

= 3,567 + 5,000 - 109

= 8,458

(c) EUAC, System C ($) = 80,000 x A/P(8%, 20) + 1,000 - 40,000 x P/F(8%, 20) x A/P(8%, 20)

= 80,000 x 0.1019** + 1,000 - 40,000 x 0.2145** x 0.1019**

= 8,152 + 1,000 - 874

= 8,278

(d) Since System C has lowest EUAC, this should be adopted.

**From A/P and P/F Factor tables

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