Question

engineering economics

A public utility district (PUD) has retained your services to provide a perpetual water service to a small resort community: Option 1 Option 2 $150,000 $235,000 45 Pipe First Cost Expected Life, years Salvage Value (S) Pump First Cost Expected Life, years 15,000 23,500 100,000 125,000 15 10,000 1,000 Pump House First Cost Expected Life, years 15,000 20,000 50 50 0 Energy (Annual) Costs First Year Gradient 50,000 1,000 increasing 20,000 1,000 decreasing 15,000 600 5,000 200 System Operation (Annual) First Year Gradient System Maintenance (Annual) First Year Gradient 25,000 1,000 10,000 400 Energy costs are expected to follow according to time in service of the pump; in other words, energy expenditures will repeat with each new pump installation. Sys- tem O&M expenses will increase perpetually Given that the MARR (i*) value is 9%, which option should be selected?

Answer 1

Answer A publie ukbly ditrict (PUD) has suehimed your Services s Small resaut commumly. paaide perpekual coaler Serice do oplien i opion 2 PiPe Fist cost Expeced ife, years $235,000 $ 150, 000 45 25 Saluage value co) 15.000 23, 500 Pump Fast cost Expeced ble, years 100, 000 125, 000 15 10 lo00 10,000 Pump House Funt cost 15,000 20,000 Erpadad ife , years 50 50 Energy (Amual) costs Fixust Gradient 50,000 20,000 year 1O00 1000 incmeasing Decxensing Syslem operation (Anmual) 5,000 15,000 First Gistadient maintenance (Annual) Forst yean 600 200 year syslem 25,000 10,000 400 1000 Gadient

as it has lowen PW and EUAC. O ophon 2 should be choosen oplion, ophion : Foxmula Firest cost x (A/p, 9% , 25) – Pipe EU AC [A] 15093-84 23647.02 Salunge value + (Ale, gr.23) , 91. Fout cost (A/p, 9% , 10) – 15166 77 Pump EUAC (B] 15516 - 19 Salvage value + (A/F, a7- , 10) Faut cost + (Alp, 9%- , 50) 1824.54 Pump House EUAC [] 1368- 40 Energy cosks: Pw od hust cost [i] 45871-56 18348.62 Fiot cost * (PfF, 94+, ) option 1: Gradient * (Pla, 9r , 10) Pw of arithmelic 243-73 438.07 option 2: Gradient * (PlG, q4, 15)| gradiemt [Pe] cests energy of PI + P2 46115. 29 17910-56 ophion !: Pwd energy costs * (alp,0t 10)}Enexqy costs EURC [D] 7185-69 222|- 96 lophon 2: Pw of eregy Total EUAC f Piret [A] + [6]+ [c] + [D] 39164.12 42860.29 Pump+ Pumphouset energy costs Total EUAC /q4. PWI 435156-93 476225. 49 Sysems operalion Cost:

3 First cost * ( Pl , qv, i) Pw of Porst cost [Pi] 13761-47 4587 16 Pw of Penpekual oulkmekic gauded Grradient / (91. ^) 74074-97 24691-36 [P2] Pw of Systems operalion (Pw) 87835.54 29278.51 PI+P2 Systems mainlemand cost : Fůist cost * (P/F , 94. ,) Pu of fnst cost [P] 22935- 78 9174.31 Pw of perpelual auilhreke gradeont Gondient / (ar. n2) 1234 56-79 49382-72 [Pē] Pw of systems meintemamce (Pw)| PI+P2 146392.57 58 55 7-03 669 385-04 564061-03 Total PW PWI + PW2 +PW3 Total EUAC Total PW* 9. 60244-65 50765.49