Accurate air flow measurement requires straight, unobstructed pipe for a minimum of 10 diame­ters upstream and 5 diameters downstream of the measuring device. In one particular applica­tion, physical constraints compromised the pipe layout, so the engineer was considering install­ing the air flow probes in an elbow (Plan A), knowing that flow measurement would be less accurate but good enough for process control. This plan would be acceptable for only 2 years, after which a more accurate flow measurement system with the same costs will be available. Plan A has a first cost of $25,000 with annual M&O estimated at $4000. Plan B involves in­stallation of a recently designed submersible air flow probe. The stainless steel probe could be installed in a drop pipe with the transmitter

Question

located in a waterproof enclosure on the hand­rail. The cost of this system will be $88,000, but because it is accurate, it would not have to be replaced for at least 6 years. Its maintenance cost is estimated to be $1400 per year. Neither system will have a salvage value. (a) At i = 12% per year, select A or B on the basis of an AW comparison. (b) Use future worth analysis to se­lect between A and B.

What will be an ideal response?

Answer 1

(a) AWA = -25,000(A/P,12%,2) – 4000
= -25,000(0.59170) – 4,000
= $-18,793
AWB = -88,000(A/P,12%,6) – 1400
= -88,000(0.24323) – 1400
= $-22,804
Select plan A

(b) Use the LCM of 6 years
FWA =AWA(F/A,12%,6) = -18,793(8.1152) = $-152,509
FWB =AWB(F/A,12%,6) = -22,804(8.1152) = $-185060

Select plan A