Question

You have received price quotations for the new photoreactor to be implemented to the production line. the price offered by the aspire is 100200 €, whereas the annual operational and maintenance costs are 18000 € with an economical life-time of 20 years and a salvage value of 20000 €. the other price offer of 140500 € is from synled, whereas the annual operational and maintenance costs are 12000 € with an economical life-time of 20 years and a salvage value of 40000 €. but an additional cost of 2500 € will be charged annually for the automation of the tank. which one will you purchase taking into consideration 10 % interest rate?

Answer 1

To determine which photoreactor to purchase, Aspire or Synled, one should calculate the net present value (NPV) of each option's lifecycle costs and revenues, including initial investment, operational costs, and salvage value, discounted at 10%. The option with the lower NPV is the more cost-effective choice.

Step-by-step explanation:

Choosing Between Photoreactors: Aspire vs Synled:

After analyzing the cost and operational data for both Aspire and Synled photoreactors, taking into consideration a 10% interest rate, it becomes clear which option is more financially viable over a 20-year period.

The Aspire photoreactor costs €100,200 to purchase with annual operational and maintenance costs of €18,000 and a salvage value of €20,000. On the other hand, the Synled photoreactor's upfront cost is €140,500 with lower annual operational and maintenance costs of €12,000, a higher salvage value of €40,000, and an additional annual cost of €2,500 for automation.

To make an informed decision, the net present value (NPV) for both options should be calculated, considering both the costs and the salvage values discounted at the 10% interest rate. The photoreactor with the lower NPV over its lifetime will be the more cost-effective choice.