Biosys water engineering Inc. plan to construct water purification plant in Kalona Iowa, to supply portable water to 40.000 Iowa homes. Biosys will spend $230 million in constructing the plant and $135000 per year in operating it. If a salvage value of 20% of the initial cost is assumed. Biosys is intended to run the project for 10 years before they transfer the operation to the county government. A complete overhaul of the plant will be carry out at the end of year 6 at an extra cost of $43200. Considering an interest rate of 8% per year: 

a)Determine the engineering economy symbols and their value for each option. 

b)Calculate how much the company will have to make each year in order to recover its investment (Capital Recovery) 

c)What is the Present worth of the water purification project.

d)Calculate the annual equivalent cost of the project.

Answer rating: 100% (QA)

period Cost Rate Cost Capital cost 0 230000000 1 230000000 230000000 1 135000 0925926 125000 2 13500... View the full answer