Problem: Can you help me get started with this assignment?
The breeching on No. 2 boiler needs to be replaced because of severe corrosion.
Two alternatives are considered:
-replace with steel according to original specifications.
-replace with F.R.P.
You have obtained the following estimates:
Cost of breeching STEEL $15000
Cost of breeching F.R.P. $18000
Installation cost for STEEL $8000
Installation cost for F.R.P. $6000
Changes to steel supports for STEEL zero
Changes to steel supports for F.R.P. $3000
Life span of STEEL is 6 years
Life span of F.R.P. is 12 years
Annual maintenance for STEEL is $1200
Annual maintenance for F.R.P. is zero
Minimum attractive rate of return is 12%
Use equivalent annual cost method.
Which alternative would you select?