Answer Happy

Q5. An oil company is planning to install a new pipeline to connect storage tanks to a processing plant 1500m away. Both 120 mm and 180mm pipes diameters are being considered. For this analysis, the company will use a minimum attractive rate of return of 10%. Annual maintenance and pumping costs may be considered to be paid in their entireties at the end of the years in which their costs are incurred. What are the approximate present worthies of the 120 mm and 180mm pipes over the first 12 years of operation? And which pipe should be selected. alternative 120mm pipe 180mm pipe diameter diameter $2,500 $3,500 $300 $200 $300 $400 Initial cost Annual maintenance cost salvage value Useful life Pump cost per hour Pump operations 12 year 12 years $1.40 600 hours/year $1.00 600 hours/year