5. A battery manufacturing plant has been ordered to cease discharging acidic waste liquids containing mercury into the city sewer system. As a 30 result, the firm must now adjust the

pH and remove the mercury from its waste liquids. Quotations from three firms are included in the following A table of costs. Bidder Foxhill Instrument Quicksilver 50,000 5000 2500 7800 Almaden 90,000 5000 If the installation will last 15 years and money is worth 12%, which equipment should be purchased? Installed Cost Annual Operating Cost Annual Income from Mercury Recovery Salvage Value $ 70,000 $5000 $6500 $10,000 5- A consulting engineer has been hired to advise a town how best to proceed with the construction of a 200,000-m³ water supply reservoir. Since 32 only 120,000 m³ of storage will be required for the next 25 years, an alternative to building the full capacity now is to build the reservoir in two Astages. Initially, the reservoir could be built with 120,000 m³ of capacity and then, 25 years hence, the additional 80,000 m³ of capacity could be added by increasing the height of the reservoir. If interest is computed at 4%, which construction plan is preferred? Construction Cost Annual Maintenance Cost Build in two stages First stage $14,200,000 Second stage 12,600,000 Build full capacity now 22,400,000 0 10,000 $75,000 add $25,000 100,000 5- Use a 10-year analysis period and an 8% interest rate to determine which alternative should be selected: 36 A B First cost $6500 $12,000 Uniform annual benefit $1800 $2000 Useful life, in years 5 10