ECON
Session 9 ch11 class (1).ppt

# Now suppose annual om costs increase 2500yr with a 1

• 60

This preview shows pages 54–60. Sign up to view the full content.

Now, suppose annual O&M costs increase \$2,500/yr, with a 1 st year O&M cost of \$2,500, the initial cost of the compressor is \$20,000, and the MARR is decreased to 1.5%. How frequently should the compressor be replaced?

This preview has intentionally blurred sections. Sign up to view the full version.

Principles of Engineering Economic Analysis , 5th edition n* = 4 yrs P = \$20,000 SV = \$0 O&M 1 = \$2,500 G = \$2,500 MARR = 1.5%
Principles of Engineering Economic Analysis , 5th edition Example 11.18 (Continued) e) Now, suppose the compressor costs \$10,000; annual O&M costs increase 10%/yr, with a 1 st year O&M cost of \$2,500; and salvage value is a decreasing geometric series, with a decrease of 20%/yr, i.e., the salvage value after 1-yr of use is \$8,000, after 2 yrs use is \$6,400, … Using a 15% MARR , how frequently should the compressor be replaced?

This preview has intentionally blurred sections. Sign up to view the full version.

Principles of Engineering Economic Analysis , 5th edition n* = 7 yrs P = \$10,000 SV = \$10,000(0.8) n O&M 1 = \$2,500 j = 10% MARR = 15%
Principles of Engineering Economic Analysis , 5th edition Example 11.18 (Continued) f) Now, suppose the compressor costs \$10,000; annual O&M costs increase 10%/yr, with a 1 st year O&M cost of \$2,500; and salvage value is a decreasing geometric series, with a decrease of 25%/yr, i.e., the salvage value after 1-yr of use is \$7,500, after 2 yrs use is \$5,625, … Using a 15% MARR , how frequently should the compressor be replaced?

This preview has intentionally blurred sections. Sign up to view the full version.

Principles of Engineering Economic Analysis , 5th edition n* = 8 yrs P = \$10,000 SV = \$10,000(0.75) n O&M 1 = \$2,500 j = 10% MARR = 15%
Principles of Engineering Economic Analysis , 5th edition End here
This is the end of the preview. Sign up to access the rest of the document.
• Fall '17
• Mike Heny
• Economics, Generally Accepted Accounting Principles, Replacements

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern