Question

4. Greasers decides to add hydrochloric acid to its waste stream to neutralize the caustic soda. The total Greasers waste flow is 2,000,000 liters per day. Tests have shown that 8,000 liters of acid must be added each hour. If the acid cost is $0.75 per 1000 liters, what is the average annual cost of the acid? What is the present worth cost of the acid feed system assuming a 10 year operational period, an initial investment of $80,000, and routine maintenance costs of $3,000 per year in addition to the acid cost (use an MARR of 15 percent)? The POTW is going to charge a sewer fee of $0.24 per 4000 liters of wastewater discharge if the caustic is not neutralized. Compare the present worth of the sewer fee (10 years, 15 %) with the system present worth. Should Greasers install the acid addition system?

Answer 1

Acid Cost= $0.75 per 1000 litre=$0.75*8 per 8000 litre per hour=$6/Hour=$6*24/Day=$144/Day

Annual Average Acid Cost=365*144=$52560(Assuming 1 year=365 days)

Annual (Maintenance+Acid cost)=3000+52560=$55560

Cash flow of the project is given below:

H Year Present Value of Cash flow Cash Flow (Cash flow/1.15^year) 0 (80,000.00) (80,000.00) 1 (55,560.00) (48,313.04) 2 (55,560.00) (42,011.34) 3 (55,560.00) (36,531.60) 4 (55,560.00) (31,766.61) 5 (55,560.00) (27,623.14) 6 (55,560.00) (24,020.12) 7 (55,560.00) (20,887.06) 8 (55,560.00) (18,162.66) 9 (55,560.00) (15,793.62) 10 (55,560.00) (13,733.58) Total(NPV) (358,842.78)

Now, Sewer fee=$0.24/4000 litre of waste water=0.24*(2000000/4000)=$120/day=120*365=$43800/day

L M Year Present Value of Cash flow Cash flow (Cash flow/1.15^year) 1 (43,800.00) (38,086.96) 2 (43,800.00) (33,119.09) 3 (43,800.00) (28,799.21) 4 (43,800.00) (25,042.79) 5 (43,800.00) (21,776.34) 6 (43,800.00) (18,935.95) 7 (43,800.00) (16,466.04) 8 (43,800.00) (14,318.30) 9 (43,800.00) (12,450.69) 10 (43,800.00) (10,826.69) Total (NPV) (219,822.07)

We can see the present worth of sewer fee ($219822.07) is lesser than system present worth of $358842.78.

Hence, they should not install the acid addition system.