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An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. In-house treatment will have an annual cost of $30,000 the first year, but process improvements will allow the cost to decline by $3,000 each subsequent year. As an alternative, an outside company will process the wastes for an initial cost of $15,200 and an annual fixed price of $13,200/year throughout the 10 year period. Either way, there is need to treat the wastes after 10 years. Using the AW method, calculate the equivalent uniform annual cost (EUAC) of each alternative and determine how the waste should be processed. The company's MARR is 10%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year.

An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. In-house treatment will have an annual cost of $30,000 the first year, but process improvements will allow the cost to decline by $3,000 each subsequent year. As an alternative, an outside company will process the wastes for an initial cost of $15,200 and an annual fixed price of $13,200/year throughout the 10 year period. Either way, there is need to treat the wastes after 10 years. Using the AW method, calculate the equivalent uniform annual cost (EUAC) of each alternative and determine how the waste should be processed. The company's MARR is 10%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. In-house treatment will have an annual cost of $30,000 the first year, but process improvements will allow the annual cost to decline by $3,000 each subsequent year. As an alternative, an outside company will process the wastes for an initial cost of $15,200 and an annual fixed price of $13,200/year throughout the 10 year period. Either way, there is no need to treat the wastes after 10 years. Using the AW method, calculate the equivalent uniform annual cost (EUAC) of each alternative and determine how the waste should be processed. The company's MARR is 10%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. The EUAC for in-house treatment is $ The EUAC for outside treatment is $ The most economical alternative is A. in-house treatment B. outside treatment (Round to the nearest dollar as positive cash flow.) (Round to the nearest dollar as positive cash flow.)
Transcribed Image Text:An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. In-house treatment will have an annual cost of $30,000 the first year, but process improvements will allow the annual cost to decline by $3,000 each subsequent year. As an alternative, an outside company will process the wastes for an initial cost of $15,200 and an annual fixed price of $13,200/year throughout the 10 year period. Either way, there is no need to treat the wastes after 10 years. Using the AW method, calculate the equivalent uniform annual cost (EUAC) of each alternative and determine how the waste should be processed. The company's MARR is 10%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. The EUAC for in-house treatment is $ The EUAC for outside treatment is $ The most economical alternative is A. in-house treatment B. outside treatment (Round to the nearest dollar as positive cash flow.) (Round to the nearest dollar as positive cash flow.)
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