A steam generation system at a biomass-fueled power plant uses an electrostatic precipitator (ESP) to clean its gaseous effluents. The power plant has consistently made use of the same type of ESP over the past several years. The installed cost of a new ESP has been relatively constant at $100,000. Records of operation and maintenance expenses indicate the following average expenses per year as a function of the age of the ESP. The MVs of the ESP are also reasonably well known as a function of age. Data graph in image attached. Determine the best time to replace the ESP if the MARR is 15% per year.
A steam generation system at a biomass-fueled power plant uses an electrostatic precipitator (ESP) to clean its gaseous effluents. The power plant has consistently made use of the same type of ESP over the past several years. The installed cost of a new ESP has been relatively constant at $100,000. Records of operation and maintenance expenses indicate the following average expenses per year as a function of the age of the ESP. The MVs of the ESP are also reasonably well known as a function of age. Data graph in image attached. Determine the best time to replace the ESP if the MARR is 15% per year.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A steam generation system at a biomass-fueled power plant uses an electrostatic
precipitator (ESP) to clean its gaseous effluents. The power plant has consistently made use of
the same type of ESP over the past several years. The installed cost of a new ESP has been
relatively constant at $100,000. Records of operation and maintenance expenses indicate the
following average expenses per year as a function of the age of the ESP. The MVs of the ESP are
also reasonably well known as a function of age.
Data graph in image attached.
Determine the best time to replace the ESP if the MARR is 15% per year.
Transcribed Image Text:Year
1
Operations and Maintenance Expenses $10,000
Market Value
$80,000
2
3
$15,000
$12,000
$70,000 $50,000
Determine the best time to replace the ESP if the MARR is 15% per year.
4
$30,000
$45,000
5
$25,000
$35,000
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