A water resources engineer is considering two alternatives to a water treatment process. Details about the...

 

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A water resources engineer is considering two alternatives to a water treatment process. Details about the cost and benefits associated with the two options are summarized in Table 2 below. Assume an interest rate of 6% and determine the best option using: a). Present worth analysis - develop cash flow diagrams for both options and use the common multiple of design lives approach; b). Annual cash flow analysis - convert the individual cost items separately (not the entire present cost for each option in one step). Table 2. Water treatment process options Option A Option B 15,000 35,000 9,000 in Y 1, 7,000 in Y1, then increasing at 3%/yr. then increasing by 325/yr. 10,000 2,000 6 years 12 years *Note that the annual operation and maintenance costs for both options depend on the age of the facility and will return to their initial value if the facility is rebuilt. Option # Investment cost Annual O&M costs* Salvage value at the end of design life Design life A water resources engineer is considering two alternatives to a water treatment process. Details about the cost and benefits associated with the two options are summarized in Table 2 below. Assume an interest rate of 6% and determine the best option using: a). Present worth analysis - develop cash flow diagrams for both options and use the common multiple of design lives approach; b). Annual cash flow analysis - convert the individual cost items separately (not the entire present cost for each option in one step). Table 2. Water treatment process options Option A Option B 15,000 35,000 9,000 in Y 1, 7,000 in Y1, then increasing at 3%/yr. then increasing by 325/yr. 10,000 2,000 6 years 12 years *Note that the annual operation and maintenance costs for both options depend on the age of the facility and will return to their initial value if the facility is rebuilt. Option # Investment cost Annual O&M costs* Salvage value at the end of design life Design life