You are an engineer at a manufacturing plant that often changes machine layouts to accommodate production of new products. Over the years, the compressed air piping has been reconfigured many times. The current piping has some abandoned sections that are ageing. The current system is inefficient and has numerous leaks. A project is being considered to remove the old piping to reduce the amount of time the air compressor must run, thereby saving electricity.
Currently, the 260kW compressor motor runs 70% of the time with an electricity cost of $0.05/kWh. The plant operates 250 days / year, 24 hours / day. Doing nothing, the leaks will continue to worsen. The compressor runtime will increase by 7% / year for the next 5 years. By then, it will be unable to meet the needs of the plant. You have proposed a design to replace the piping now, which will cost $28,500. You have determined that doing so will reduce the air compressor runtime to 54% and will remain steady.
Required:
a. If the company uses a discount rate of 12% on these types of investments, should the project be approved, based on a present value approach?
b. Create cash flow diagrams for both scenarios.
c. Determine which option is better and why?
Solved
Show answers
More tips
- C Computers and Internet Clearing Cache: How to Speed Up Your Browser...
- S Style and Beauty How are artificial nails removed?...
- S Style and Beauty Secrets of Tying a Pareo: 5 Ways...
- F Food and Cooking Everything You Need to Know About Pasta...
- C Computers and Internet How to Choose a Monitor?...
- H Horoscopes, Magic, Divination Where Did Tarot Cards Come From?...
- S Style and Beauty How to Make Your Lips Fuller? Ideas and Tips for Beautiful Lips...
- C Computers and Internet How to Learn to Type Fast?...
Answers on questions: Business
- B Business Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell...
- B Business What is the age distribution of promotion-sensitive shoppers? A supermarket super shopper is defined as a shopper for whom at least 70% of the items purchased were on sale or...
- B Business You are considering purchasing a piece of industrial equipment that costs $30,000. You decide to make a down payment in the amount of $5,000 and to borrow the remainder from...
- B Business Your Competitive Intelligence team reports that a wave of product liability lawsuits is likely to cause Baldwin to pull the product Bat entirely off the market this year. Assume...
- B Business Which of the following is an example of a type of inventory management activity? a) JIT or just-in-time inventory control system, b) RFI or radio frequency identification systems,...
- B Business Use the following information to determine the break-even point in units (rounded to the nearest whole unit): Unit sales 58,000 Units Unit selling price $14.90 Unit variable...
- M Mathematics When markup is based on a. cost is equal to selling price b. cost is the portion c. cost is 100 percent d. markup is the rate...
- M Mathematics Write 4.39 as a mixed number in simplest form. the decimal .39 is repeating. i don’t know how to type the solid line over the .39...
- E English Matt wants to photograph his daughter using ambient light that will create a calm and serene image. what source should he use to get this kind of light? a. sun or moon b. soft,...
- M Mathematics What all is 49,836 divisible by? ! plz in a hurry!...
Ответ:
I HI, jalverez06
Explanation:
Yes I also agree with this