(PE) Water for Semiconductor Manufacturing Case It is anticipated that the needs for UPW (ultrapure water) at the new Angular Enter­prises site will continue for a long time, as much as 50 years. This is the rationale for using capitalized cost as a basis for the economic decision between desalinated seawater (S) and purified groundwater (G). These costs were determined to be CCS = $?53.58 million and CCG = $?48.91 mil­lion.

Question

Groundwater is the clear economic choice.
Yesterday, the general manager had lunch with the president of Brissa Water, who offered to sup­ply the needed UPW at a cost of $5 million per year for the indefinite future. It would mean a de­pendence upon a contractor to supply the water, but the equipment, treatment, and other costly ac­tivities to obtain UPW on site would be eliminated. The manager asks you to make a recommendation about this seemingly attractive alternative under the following conditions at the same MARR of 12% per year as used for the other analyses:
(a) The annual cost of $5 million remains con­stant throughout the time it is needed.
(b) The annual cost starts at $5 million for the first year only, and then increases 2% per year. (This increase is above the cost of providing UPW by either of the other two methods.)

Answer 1