ME 200 Homework

Due Monday May 10

From Chan S. Park, Fundamentals of Eng neer ng E!onom !s, Prent !e"Hall, 200#. $n ele!tr !al ut l ty s e%&er en! ng shar& &ower demand, wh !h !ont nues to grow at a h gh rate n a !erta n lo!al area. 'wo alternat (es to address th s s tuat on are under !ons derat on. Ea!h alternat (e s des gned to &ro( de enough !a&a! ty dur ng the ne%t 2) years. *oth alternat (es w ll !onsume the same amount of fuel, so fuel !ost s not !ons dered n the analys s. 'he alternat (es are deta led as follows+ $lternat (e $+ n!rease the generat ng !a&a! ty now so that the ult mate demand !an ,e met w th add t onal e%&end tures later. $n n t al n(estment of -.0 m ll on would ,e re/u red, and t s est mated that th s &lant fa! l ty would ,e n ser( !e for 2) years and ha(e a sal(age (alue of -0.0) m ll on. 'he annual o&erat ng and ma ntenan!e !osts 1 n!lud ng n!ome ta%es2 would ,e -0.# m ll on. $lternat (e *+ s&end -10 m ll on now, and follow th s e%&end ture w th add t ons dur ng the 10th year and the 1)th year. 'hese add t ons would !ost -10 m ll on and -12 m ll on, res&e!t (ely. 'he fa! l ty would ,e sold 2) years from now w th a sal(age (alue of -1.) m ll on. 'he annual o&erat ng and ma ntenan!e !osts 1 n!lud ng n!ome ta%es2 n t ally w ll ,e -2)0,000, n!reas ng to -.)0,000 after the se!ond add t on 1from the 11th year to the 1)th year2 and to -#)0,000 dur ng the f nal 10 years. 1$ssume that these !osts ,eg n one year su,se/uent to the a!tual add t on.2

3f the f rm uses 1)4 as a M$55, wh !h alternat (e should ,e undertaken, ,ased on the &resent" worth !r ter on6 3t s re!ommended that you use E%!el for th s analys s.