Part 2: (Total -30 Marks) Q8. (15Marks) The emirate of Fujairah has two renewabl
ID: 2786120 • Letter: P
Question
Part 2: (Total -30 Marks) Q8. (15Marks) The emirate of Fujairah has two renewable energy alternatives available for providing energy at a remote govenment research facility. The cash flow estimates associated with each alternative are given below Alternative I 1,000,000 Alternative II 990,000 359,500 Initial cost, $ Annual maintenance costs, S/yr 5380.000 $500,000 $17,000 59.500 $15,800 Annual benefits, S/yr Using the conventional B/C ratio method, with Annual Worth as the equivalent-worth measure, taking an interest rate of 10% per year over a 25-year study period. Calculate: A. The Annual worth of cost of Alternate 1 (4 Marks) B. The Annual worth of cost of Alternate 2 (4 Marks) C. B/C Ratio for Alternative 1 (4 Marks) D. Recommend the best Alternative (3 Marks) Space for Solution:Explanation / Answer
Comparison on the basis of Annual worth method Alternative 1 is best because its give positive result.
Use of (A/P and A/F Factor table)
Ans) A) AW of Alternative 1=(-1000000(A/P,I,n)-$380000+$500000+$17000(A/F,I,n) AW of Alternative 1=(-1000000(A/P,10%,25)-$380000+$500000+$17000(A/F,10%,25) AW of Alternative 1=-1000000*.1102-$380000+$500000+$17000*.0102 Aw of Alternative 1= 9973.4 B) AW of Alternative 2=(-990000(A/P,I,n)-$359500+$459500+$15800(A/F,I,n) AW of Alternative 2=(-990000(A/P10%,25)-$359500+$459500+$15800(A/F,10%,25) AW of Alternative 2=-990000*.1102-$359500+$459500+$15800*.0102 Aw of Alternative 1= -8936.84 C ) BC Ratio of Alternative 1=(AW of Benefit/Aw of initial Investment+AW of operating Cost-AW of Salvage Value) BC Ratio of Alternative 1=$500000/($1000000(A/P,I,n)+$380000-$17000(A/F,I,n)) BC Ratio of Alternative 1=$500000/($1000000*.1102+$380000-$17000*.0102) BC Ratio of Alternative 1= 1.020 Conventioanl BC Ratio= 1.020 D)Comparison on the basis of Annual worth method Alternative 1 is best because its give positive result.
Use of (A/P and A/F Factor table)