Question

The engineer of problem 4 now wants to consider an aluminum tank as well as the steel and fiberglass tank. The steel tank costs $201,000 and is expected to last 15 years. The aluminum tank is expected to last 25 years. The fiberglass tank costs $292,000 and is expected to last 30 years. None of the tanks has a salvage value at the end of its useful life. At a MARR of 8%, determine the highest cost for the aluminum tank for which it will be the preferred option. Express your answer in $ to the nearest $1,000. An engineer must choose between two materials for an underground storage tank. A steel tank costs $207,000 and is expected to last 15 years. A fiberglass tank costs $313,000 and is expected to last 30 years. Neither tank has a salvage value at the end of its useful life. Determine the MARR below which the FRP tank is preferred. Express your answer in \% (not a decimal) to the nearest 0.1%.

Answer 1

To determine the highest cost for the aluminum tank for which it will be the preferred option, compare the present worth of the costs for each tank option.

Step-by-step explanation:

To determine the highest cost for the aluminum tank for which it will be the preferred option, we need to compare the present worth of the costs for each tank option.

The present worth (PW) of the steel tank can be calculated using the formula: PW = C / (1+i)^n, where C is the initial cost, n is the number of years it will last, and i is the interest rate. For the steel tank, the PW would be $201,000 / (1+0.08)^15 = $79,654.86.

The same calculation can be done for the aluminum tank and the fiberglass tank. Comparing the PW values, we can determine the highest cost for the aluminum tank for which it will be the preferred option.

To find the maximum cost for an aluminum tank to be preferred at an 8% MARR, the Equivalent Annual Cost (EAC) for the steel and fiberglass tanks should be calculated and then used to find the aluminum tank's cost by equating its EAC to the lowest of the two, over a lifespan of 25 years.

To determine the highest cost for the aluminum tank for which it will be the preferred option compared to the steel and fiberglass tanks when evaluated at a Minimum Attractive Rate of Return (MARR) of 8%, we need to calculate the Equivalent Annual Cost (EAC) for each option. Since the steel tank costs $201,000 and lasts 15 years, the aluminum tank lasts 25 years, and the fiberglass tank costs $292,000 and lasts 30 years, we use the formula EAC = P * (i / (1 - (1 + i)^(-n))) where P is the present cost, i is the interest rate (MARR in decimal form), and n is the number of years. The steel tank's EAC is calculated as $201,000 * (0.08 / (1 - (1 + 0.08)^(-15))) and the fiberglass tank's EAC is calculated as $292,000 * (0.08 / (1 - (1 + 0.08)^(-30))). We then find the maximum cost for the aluminum tank by setting its EAC equal to the lower of the EACs calculated for steel and fiberglass tanks, using the same formula with 25 years as 'n' and solving for 'P'.

The information provided does not relate to the calculation required for this engineering economy problem, as it involves volumes and costs per gallon without a direct link to the storage tank considerations. Hence, that information will not be used in answering this specific question.