Consider the Three Mutually Exclusive Alternatives Below

question 26

Essay

Consider the three mutually exclusive alternatives below. At the end of their useful lives, alternatives X and Z will be replaced with identical replacements so that a 10- year service requirement is met. If the MARR is 3% per year, which alternative (if any) should be chosen? $$\begin{array} { | l | l | l | l | } \hline \text { Alternative } & X & Y & Z \\\hline \text { Capital Investment } & \$ 300,000 & \$ 425,000 & \$ 500,000 \\\hline \text { Annual savings } & \$ 68,750 & \$ 108,750 & \$ 188,750 \\\hline \text { Salvage value } & \$ 90,000 & \$ 125,000 & \$ 140,000 \\\hline \text { Life, years } & 10 & 20 & 5 \\\hline\end{array}$$

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Definitions:

Pyroclastic Flow

A fast-moving current of hot gas and volcanic materials (ash, lava fragments) that flows down the sides of a volcano during an explosive eruption.

Lahar

A mudflow mostly composed of volcanic-derived materials and generally formed on the flank of a volcano.

Composite Volcanoes

Volcanoes constructed from multiple layers of lava flows, volcanic ash, and other volcanic debris, characterized by steep profiles and periodic explosive eruptions.

Lahars

Volcanic mudflows or debris flows that occur when volcanic materials become saturated with water and rapidly move down slopes.