Please answer 3 - 5 thank you!
- 5 thank you!
EUAC for Plant 1 = 2 billion + 2 milion(A/P, 8%, 15) + 3 million (A/P, 8%, 15)
(A/P, 8%, 15) = 0.1168 (using factor table for 8% and 15 years)
EUAC = 2 billion + 2 million *0.1168 + 3 * 0.1168 = 2 billion + 233600 + 350400 = 2,000,584,000
Pcost of plant after 15 years = 1.5 billion(P/A, *%, 15) = 12839250000
EUAC for plant 2 = 1.25 billion + 12839250000(A/P, 8%, 15) + 1.5 million (A/P, 8%, 15) + 3 million (A/P, 8%, 15)
(P/A, 8%, 15) = 8.5595 (from factor table)
EUAC = 1.25 billion + 1,499,624,400 + 175200 + 350400 = 3,000,150,000
SInce, Option 1 has lower EUAC, It is better option than option 2.
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