Question

A large utility company is considering two mutually exclusive methods for storing its coal combustion by-products. One method is wet (slurry) storage and the second method is dry storage. The company must adopt one of those two methods for all 2B of its ash and gypsum impoundments at seven coal-fired power plants. Wet storage requires an initial investment of S2 billion, followed by annual maintenance expenses of S300 million over a 10-year period of time. Dry storage has a $2.5 billion capital investment and $150 million per year upkeep expenses over its 7-year life lf the company's MARR is 10% per year, which method should be recommended assuming repeatability?

(Engineering Economy 17th Edition)

Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year The equivalent uniform annual cost for the wet storage is million.(Round to one decimal place.)

Answer 1

Answer:-

For Wet storage:

MARR=10%

n=10 year

Cost = 2000M

Annual maintenance expense = 300M

EUAC for Wet storage = 2000M(A/P,10%,10)+300M

=2000M(0.162745)+300M

=325.49M+300M

=625.49M

=625.5M

For Dry storage:

MARR=10%

n=7 YEARS

Cost = 2500M

Annual maintenance expense = 150M

EUAC for Dry storage = 2500M(A/P,10%,7)+150M

=2500M(0.205405)+150M

=513.5125+150

=663.5125M

=663.5M

As the EUAC for the Wet storage is less so it should be selected.

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