The activated sludge unit of a wastewater treatment plant requires an aerator. Two options exist and have the characteristics shown in the table. The city owner of the treatment plant sets an interest rate of 8%. Analysis period is 10 years. Determine which aerator lo purchase.
| Aerator A | Aerator B |
Initial cost | 400,000 | 200,000 |
Annual operating cost | 60,000 | 75,000 |
Salvage value | 60,000 | 20,000 |
Lifetime (years) | 10 | 5 |
(a) Form the cash flow table for a present worth analysis, showing the correct sign for all entries. Also show the incremental cash flow column (A-B)
(b) Solve by present worth analysis,
(c) Solve by annual cash flow analysis.
(d) Solve by incremental benefit-cost ratio analysis.
(e) Solve by incremental rate of return analysis. Do not find the exact value for the incremental rate of return, just check at the MARR
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