3. The chimney of the Chemical Enginering building was built 25 years ago in today's currency for 5,000,000 TL. The economic life of this chimney is estimated to be 50 years and there is no salvage value. This damaged chimney must be strengthened or demolished and rebuilt. 3,000,000 TL is required for the strengthening of the chimney and the economic life will increase 30 years as a result of the strengthening. In this case, the annual maintenance cost of the chimney is estimated to be 250,000 TL. If the chimney is rebuilt, 7,500,000 TL will be spent and its economic life will be 60 years. In this case, it is estimated that the annual maintenance cost of the chimney will be 100,000 TL and there will be no salvage value. It is estimated that the demolishment expenses of the old chimney will be 500,000 TL. If interest rate is 20%, as a Chemical Engineer, what kind of decision would you recommend the university to take regarding the chimney of the building?

3. The chimney of the Chemical Enginering building was built 25 years ago in today's currency for 5,000,000 TL. The economic life of this chimney is estimated to be 50 years and there is no salvage value. This damaged chimney must be strengthened or demolished and rebuilt. 3,000,000 TL is required for the strengthening of the chimney and the economic life will increase 30 years as a result of the strengthening. In this case, the annual maintenance cost of the chimney is estimated to be 250,000 TL. If the chimney is rebuilt, 7,500,000 TL will be spent and its economic life will be 60 years. In this case, it is estimated that the annual maintenance cost of the chimney will be 100,000 TL and there will be no salvage value. It is estimated that the demolishment expenses of the old chimney will be 500,000 TL. If interest rate is 20%, as a Chemical Engineer, what kind of decision would you recommend the university to take regarding the chimney of the building?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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