An oil refinery finds that it is now necessary to subject its waste liquids to a costly

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An oil refinery finds that it is now necessary to subject its waste liquids to a costly treating process before discharging them into a nearby stream. The engineering department estimates that the waste liquid processing will have cost $30,000 by the end of the first year. By making process and plant alterations, it is estimated that the waste treatment cost will decline $3000 each year. As an alternate, a specialized firm, Hydro-Clean, has offered a contract to process the waste liquids for 10 years for a fixed price of$15,000 per year, payable at the end of each year. Either way, there should be no need for waste treatment after 10 years. The refinery manager considers 8% to be a suitable interest rate. Use an annual cash flow analysis to determine whether he should accept the Hydro-Clean offer.
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Engineering Economic Analysis

ISBN: 9780195168075

9th Edition

Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle

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