In an effort to reduce pipe breakage, water hammer, and product agitation, a chemical company plans to
Question:
In an effort to reduce pipe breakage, water hammer, and product agitation, a chemical company plans to install several chemically resistant pulsation dampeners. The cost of the dampeners today is $120,000, but the company has to wait until a permit is approved for its bidirectional port-to-plant product pipeline. The permit approval process will take at least 2 years because of the time required for preparation of an environmental impact statement. Because of intense foreign competition, the manufacturer plans to increase the price only by the inflation rate each year. If the inflation rate is 2.8% per year and the company's MARR is 20% per year, estimate the cost of the dampeners in 2 years in terms of
(a) Today's dollars
(b) Future dollars.
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
Step by Step Answer:
Rate as of now is 120000 Cost of dampeners after two tears in todays dollars is 120000 For future d...View the full answer
