HW8_Solutions

# HW8_Solutions - DEPARTMENT OF CIVIL AND ENVIRONMENTAL ENGINEERING UNIVERSITY OF CALIFORNIA BERKELEY CE11 ENGINEERED SYSTEMS AND SUSTAINABILITY

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DEPARTMENT OF CIVIL AND ENVIRONMENTAL ENGINEERING UNIVERSITY OF CALIFORNIA, BERKELEY CE11 ENGINEERED SYSTEMS AND SUSTAINABILITY, SPRING 2009 H OMEWORK 8: E CONOMICS AND THE E NVIRONMENT DUE F RIDAY , M AY 8, 2009 (T OTAL : 100 POINTS ) *****SOLUTIONS***** 1. A wastewater treatment plant adds \$600,000 to the cost of a computer chip manufacturing facility. (a) What is the annualized capital cost of this plant if its lifetime is 15 years, the interest rate is 10%, and the end-of-life scrap value is \$30,000? (15 points) Find the Net Present Value NPV = -\$600,000 + \$30,000*(P/F, 10%, 15) NPV = -\$600,000 + \$30,000*(0.239) NPV = -\$592,800 Determine the Annualized Capital Cost Annualized Capital Cost = -\$592,800*(U/P, 10%, 15) = -\$592,800*(0.131) = -\$77,900/year (b) If the facility manufactures 1 million chips per year, what is the added cost per chip due to capital expenditure for wastewater treatment? (5 points) Added cost per chip = \$77,900/1,000,000 chips = \$0.078/chip 2. New instrumentation is needed to monitor the level of environmental emissions at a large manufacturing plant. Two available systems give identical performance. One system costs \$100,000 and will last for 10 years; the other costs \$60,000 and will last for 6 years. The scrap value is negligible in both cases. Both systems also have a maintenance cost of \$1,000/yr. Is one

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## This note was uploaded on 05/08/2011 for the course CE 11 taught by Professor Horvath during the Spring '11 term at University of California, Berkeley.

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HW8_Solutions - DEPARTMENT OF CIVIL AND ENVIRONMENTAL ENGINEERING UNIVERSITY OF CALIFORNIA BERKELEY CE11 ENGINEERED SYSTEMS AND SUSTAINABILITY

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