A company having 50 employees working on a 5-day week schedule is choosing between installing an...

A company having 50 employees working on a 5-day week schedule is choosing between installing an electric water heater with a small filter and a Reverse Osmosis water purifier in providing drinking water to its employees. In Hong Kong, the company is open every day except on 52 Sundays, 52 Saturdays and 17 public holidays in a year. On the average each employee consumes 2 liters per working day (human body requires between 1 and 7 liters of water per day to avoid dehydration). The electric water heater costs $ 2,000 and can be used for 10 years; after its useful life, the salvage value balances with the dismantling costs. It consumes about 10 kWh of electricity per day in use and its filter should be changed 4 times a year which would cost $ 50 each time. The Reverse Osmosis water purifier costs $ 8,000 plus $ 2,000 installation cost and is expected to have a useful life of 10 years and would have no salvage value after its useful life. It requires no electricity to operate but the change of filters and membrane costs $500 per year. Assuming its water production rate is 50 % (half of the water is discarded during production of drinkable water), determine the choice of the company if the electricity tariff is $1.043/kWh and water tariff is $4.58/m3 for the MARR being 8% p.a.

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jeff jeffy answered 10 months ago

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