6.12 Dutch Mobile Company is producing jet fuel from crude oil in its refinery in Mexico....

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6.12 Dutch Mobile Company is producing jet fuel from crude oil in its refinery in Mexico. It is considering three mutually exclusive alternatives to improve the efficiency of its refinery process. The cash flows for the three alternatives are shown below. Using AW approach and assuming a MARR of 8 percent, determine which alternative should be selected by Dutch Mobile. First cost Annual operating cost Salvage value Life, years Alternative 1 $300,000 $50,000 in year 1 increasing by $20,000 per year $50,000 4 Alternative 2 $500,000 $65,000 $70,000 6 Alternative 3 $800,000 $30,000 in year 1 growing at 5% per year $100,000 10 6.12 Dutch Mobile Company is producing jet fuel from crude oil in its refinery in Mexico. It is considering three mutually exclusive alternatives to improve the efficiency of its refinery process. The cash flows for the three alternatives are shown below. Using AW approach and assuming a MARR of 8 percent, determine which alternative should be selected by Dutch Mobile. First cost Annual operating cost Salvage value Life, years Alternative 1 $300,000 $50,000 in year 1 increasing by $20,000 per year $50,000 4 Alternative 2 $500,000 $65,000 $70,000 6 Alternative 3 $800,000 $30,000 in year 1 growing at 5% per year $100,000 10

Answer rating: 100% (QA)

To determine which alternative should be selected using the Annual Worth AW approach we need to calc... View the full answer