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The document describes a problem set involving calculating the present worth of a fluidized-bed combustion vessel project. It provides details on the vessel's initial investment cost of $100,000, annual costs of $8,000, and a $20,000 relining cost in year 5. Using the given 15% interest rate, formulas are provided to calculate the present worth as $146,116.27, accounting for initial costs, annual costs over 10 years, and discounted relining costs in year 5.

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Joselito Daroy
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17 views1 page

Number 1

The document describes a problem set involving calculating the present worth of a fluidized-bed combustion vessel project. It provides details on the vessel's initial investment cost of $100,000, annual costs of $8,000, and a $20,000 relining cost in year 5. Using the given 15% interest rate, formulas are provided to calculate the present worth as $146,116.27, accounting for initial costs, annual costs over 10 years, and discounted relining costs in year 5.

Uploaded by

Joselito Daroy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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PROBLEM SET NO.

2
ES 321

1. A certain fluidized-bed combustion vessel has an investment cost


of $100,00, a life of 10 years and negligible market (resale)
value. Annual cost of materials, maintenance, and electric power
for the vessel are expected to total to $8,000.00. A major relining
of combustion vessel will occur during the fifth year at a cost of
$20,000; during this year, the vessel will not be in service. If the
interest rate is 15% per year, what is the lump sum equivalent
cost of this project at the present time?

A annual cost = $8,000


i interest rate per year = 15%
n 10 years
IC initial investment cost = $100,000
A5 $20,000

Present worth IC
A
i

1 ( 1 i )10 ( A5 A )( 1 i )5

Present worth
$8 ,000
$100 ,000
0.15

1 ( 1 0.15 )10 ($20 ,000 $8 ,000 )( 1 0.15 )5

Present worth $146 ,116 .27

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