An environmental engineer wants to evaluate three different methods for disposin

Question

An environmental engineer wants to evaluate three different methods for disposing of nonhazardous chemical waste: land application, fluidized-bed incineration, and private disposal contract. Use the estimates below to help her determine which has the least cost at i= 13% per year on the basis of an annual worth evaluation. Land S-155,000 $-98,000 $33,000 Incineration $-830,000 $-66,000 $380,000 Contract 0 First Cos AOC per Year Salvage Value Life $136,000 4years6 years2 years The environmental engineer selects a fluidized-bed incineration

Explanation / Answer

Land Incineration Contract Initail Investment -155000 -830000 0 Annual M & O -98000 -66000 -136000 Annuity factor at 13% 2.97447 3.99755 1.6681 Present value of M&O -291498 -263838 -226862 Less: Present value f Salvage Land (33000*0.61332) 20239.56 Incineration (380000*0.48032) 182521.6 0 Net Present worth -426259 -911317 -226862 Divide: Annuity factor 2.97447 3.99755 1.6681 Annualised present worth -143306 -227969 -136000 The Environmental engineer shall select CONTRACT OPTION.

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