A new water treatment operation is being considered for the new automated water treatment plant in South Africa. The sys

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A New Water Treatment Operation Is Being Considered For The New Automated Water Treatment Plant In South Africa The Sys 1 (31.58 KiB) Viewed 29 times

A New Water Treatment Operation Is Being Considered For The New Automated Water Treatment Plant In South Africa The Sys 2 (61.09 KiB) Viewed 29 times

A new water treatment operation is being considered for the new automated water treatment plant in South Africa. The system can be purchased and installed for $44.5 million and requires additional annual operating and maintenance expenses of $2.7 million over a 22- year period. However, it will save an estimated $5.7 million each year from the reduced operational, environmental, and security risks. The company uses a MARR of 12 percent per year in its economic evaluations of the new system. The market value of the system will be $4.45 million at the end of 22 years. solve for IRR, and Justify your answer with calculations.
Factor Name Formula Purpose (F/P, 1, 1) Single payment compound amount factor (1+i)" Moves a single payment to N periods later in time 1 (P/F,,M) Single payment present worth factor (1+i)* Moves a single payment to N periods earlier in time (A/F, 1, ) Sinking Fund factor i (1+i)-1 Takes a single payment and spreads into a uniform series over Nearlier periods. The last payment in the series occurs at the same time as E (F/A,,M) Uniform Series Compound Amount factor (A/P, 1,N) Capital Recovery Factor (Ρ/Α, 1, Ν) Uniform Series Present Worth Factor Takes a uniform series and (1+r)^-1 moves it to a single value at the time of the last payment i in the series. Takes a single payment and i(i+1) spreads it into a uniform series over N later periods. (1+i)"-1 The first payment in the series occurs one period later than P. (1+i)-1 Takes a uniform series and moves it to a single payment i(i+1) one period earlier than the first payment of the series Takes a arithmetic gradient (1+i)-i N-1 series and moves it to a single payment two periods if (1+i)" earlier than the first nonzero payment of the series Takes a arithmetic gradient (1+i)" - iN-1 series and converts it to a uniform series. The two i(1+i)- series cover the same interval, but the first payment of the gradient series is 0. (P/G,1,1) Arithmetic Gradient Present Worth Factor (A/G,1,M) Arithmetic Gradient to Uniform Series Factor