Installation cost, $ million pumping, operating, security cost, $ million per year Replacement of valves and appurtenances in year 25, $ million Expected life, years Land Underse -200 -300 -20 -2 -30 -70 50 50
Installation cost, $ million pumping, operating, security cost, $ million per year Replacement of valves and appurtenances in year 25, $ million Expected life, years Land Underse -200 -300 -20 -2 -30 -70 50 50
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
A pipeline engineer working in Kuwait for the oil giant BP wants to perform a present worth analysis on alternative pipeline routings—the first predominately by land and the second primarily undersea. The undersea route is more expensive initially due to extra corrosion protection and installation costs, but cheaper security and maintenance reduces annual costs. Use Present Worth Analysis with a MARR = 10% to determine which route should be selected.
Transcribed Image Text:Installation cost, $ million
pumping, operating, security cost, $ million per year
Replacement of valves and appurtenances in year 25, $ million
Expected life, years
Land
-200
-20
-30
50
Undersea
-300
-2
-70
50
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