An environmental engineer wants to evaluate three different methods for disposin
ID: 1141265 • Letter: A
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 12% per year on the basis of an annual worth evaluation. Land Incineration $-810,000 $-91,000 $-48,000 $310,000 4 years6 years Contract 0 $-142,000 0 2 years $-145,000 First Cost AOC per Year Salvage Value $28,000 Life The environmental engineer selects a (Click to select) private disposal contract land application fluidized-bed incinerationExplanation / Answer
Annual worth (AW) are computed as follows.
AW, Land ($) = - 145,000 x A/P(12%, 4) - 91,000 + 28,000 x P/F(12%, 4) x A/P(12%, 4)
= - 145,000 x 0.3292** - 91,000 + 28,000 x 0.6355** x 0.3292**
= - 47,734 - 91,000 + 5,858
= - 132,876
AW, Incineration ($) = - 810,000 x A/P(6%, 4) - 48,000 + 310,000 x P/F(6%, 4) x A/P(6%, 4)
= - 810,000 x 0.2432** - 48,000 + 310,000 x 0.5066** x 0.2432**
= - 196,002 - 48,000 + 38,194
= - 205,808
AW, Contract ($) = - 142,000
Since Land has lowest negative AW, the enginner selects Land application.
**From A/P and P/F Factor tables.