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Homework answers / question archive / An engineer is trying to decide which process to use to reduce sludge volume prior to disposal
An engineer is trying to decide which process to use to reduce sludge volume prior to disposal. Belt filter presses (BFP) will cost $200,000 to buy and $80,000 per year to operate. Belts will be replaced one time per year at a cost of $5,500. Centrifuges will cost $400,000 to buy and $120,000 per year to operate, but because the centrifuge will produce a thicker cake, the sludge hauling cost to the monofill will be $30,000 per year less than for the belt presses. The useful lives are 5 and 10 years for BFP and the Centrifuge respectively. The salvage values are assumed to be 10% of the first cost of each process whenever they are closed down or replaced. The interest rate is 8%. Use the PW method to select the more economical process.
After seeing image we get that we can't compare the project with unequal life's so first we need to made them comparable so
For BEP
npv = -527765.85
Pv factor for 5 years = 3.9927
Now = -527765.85 ÷ 3.9927
= -132182.69
For centrifuge
Npv = -985376
Pv factor for 10 years = 6.71
Now = -985376 ÷ 6.71
= -146851.86
On the basis of above result we came to know that after there equality of life the project of BEP is more economical then Project CENTRIFUGE because of less cost
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