Houston Metropolitan Water Utility Company purchased series of high-lift centrifugal pumps for aggregate sum of $250000. The cost of energy for operating these high-lift pumps in the water distribution system was $1.4 million for the first four years. Beginning in year five, the cost increased by $30,000 each year for the next 16 years. It is intended at the end of this subsequent 16 years that the pumps will be replaced and sold at a market value of about 20% of the initial purchase cost. The MARR for this project is 7%.
Determine the engineering economy symbols and their value for each option.
Construct the cash flow diagram
What is the equivalent worth of the project now
Calculate the annual equivalent cost of the project