ECH 158A

To: Prof. Palazoglu

From: Ly Truong Tung
Date: April 4, 2019
Subject: Homework 2
CC: Assoc. Prof. Nguyen Anh Dung

Problem 1
Use CEPCI = 500 for 2006 ; CEPCI (1986) = 318 ; CEPCI (1981) = 297 ; CEPCI (1976) = 192

Year Capacity (kW) Purchased Cost (103 $) CEPCI

? 1,000 645.93 ?
2000 500 500.00 394
2007 775 811.68 500

Using the formula :

Capacity A m I2
(
CostA = CostB * Capacity B ) and CostA, yr1 = CostA,yr2 * I 1
In 1986 we knows CEPCI was 318, use this information to determine year
318
For 500 kW : C1986 = ( )* ( $500) = $403.55
394

318
For 775 kW : C1986 = ( )* ( $811.68) = $516.23
500
So,
$ 403.55
( ¿)
$ 516.23
m = log 500 kW
¿ = 0.562
log( ¿) ¿
775 kW

1000 kW
For 1000 kW : C1986 = ($403.55)* ( 500 kW )0.562 = $595.76

$ 645.93
=> CEPCIyr = 318* = 344.77
$ 595.76

Conclusion : CEPCI of 344.77 corresponds to about 1988. The compressor was not purchased in
1976 when CEPCI was approximately 192.
Problem 2

Problem 3
We knows : P = $15000 , r = 0.09% , n = 10yrs
a, m = 1,
r mn 0.09 10
F = P*( 1+
m
) = $15000* (1+
1
) = $35510.45
b, m = 4
r mn 0.09
F = P*( 1+
m
) = $15000* (1+ 4 )40 = $36527.83
c, m = 12
r mn 0.09 120
F = P*( 1+
m
) = $15000* (1+
12
) = $36770.35
d, m = 365
 r mn 0.09 3650
F = P*( 1+
m
) = $15000* (1+
365
) = $36889.95

Problem 4
r
Using the equation : K = Ci + P = Ci + CR / [ (1 + m )mn -1]
Exchanger 1
We have : Sequip = 0 ; Ci = $20000 ; n = 6 years ; r = 0.06% ; m = 1
Where :
Replacement cost CR = $20000 – 0 = $20000
r
=>K = Ci + P = Ci + CR / [ (1 + m )mn - 1 ] = $20000 + $20000 / [(1 + 0.06 )6 - 1] = $67787.54

Exchanger 2
We have : Sequip = $4000 ; Ci = $34000 ; n = 10 years ; r = 0.06% ; m = 1
Where :
Replacement cost CR = $34000 – $4000 = $30000
r
=>K = Ci + CR / [ (1 + m )mn - 1 ] = $34000 + $30000 / [(1 + 0.06 )10 - 1] = $71933.97

Conclusion : The capitalized cost of exchanger 1 is less than so it is cheaper.

Problem 5
We knows : TPI = TDC = FCI = $2000000
WC = $150000
i = 0.1
t = 0.2
1
D = d*CTDC = d*CFCI with d = (n = 5)
n
NE = (1- t)*( S - Cexcl,dep - D )
CF = NE + D - CFCI - CWC
Cum.PV(k) = Cum.PV(k-1) + CF(k)/ (1+0.15)k
Using Excel program we have the result in the table :
Year CTDC=CFPI CWC d D Cexcl.dep. S NE CF Cum. PV(k)
0 -2,000,000 -150,000 0 -2,150,000 -2,150,000
1 0.10 200,000 175,000 850,000 380,000 580,000 -1,622,727
2 0.20 400,000 175,000 850,000 220,000 620,000 -1,110,331
3 0.20 400,000 175,000 850,000 220,000 620,000 -644,515
4 0.20 400,000 175,000 850,000 220,000 620,000 -221,047
5 0.20 400,000 175,000 850,000 220,000 620,000 163,924
6 150,000 0.10 200,000 175,000 850,000 380,000 430,000 406,648