Question

A pump is required for a sewage treatment plant in a municipality. Three options are under consideration. Applying an interest rate of 7.5%, the pump options data shown below, and the most computationally efficient appropriate engineering economic measure that can be used to compare the cost of the pump options, answer the questions that follow.

Option Cost	A	B	C
Purchase Cost	56,000	26,000	20,000
First Year Operating Cost	8,000	10,500	11,500
Operating Cost Increase per Period	500	1000	1400
Life / Salvage	8 / 1,000	5 / 600	4 / 500

a. What is the engineering economic measure value for option A?     

b. What is the engineering economic measure value for option B?

c. What is the engineering economic measure value for option C?

Answer 1

Here most efficient the economic measure would be Equivalent Annual Worth. First we can determine the Present worth then we can determine the EAW

Option A

Similarly calculate the EAW of option B

Now Calculating EAW of option C

Out of these three option Option B must be selected as its EAW is lowest.

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