Part 2: [6 marks]
Standby power for pumps at water distribution booster stations can be provided by either gasoline-or diesel-powered engines. The costs for the gasoline engines are as follows:
Gasoline
First cost, $
Annual M&O, $ per year
Salvage value, $
Life, years
-150,000
-41,000
23,000
15
The incremental PW cash flow equation associated with (diesel – gasoline) is
0 = -40,000 + 11,000 (P/A, i, 15) + 16,000(P/F, i, 15)
Determine the following:
(a) First cost of the diesel engines
(b) Annual M&O cost of the diesel engines
(c) Salvage value of the diesel engines