Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 25

The supervisor of a community swimming pool has developed two methods for chlorinating the pool. If gaseous chlorine is added, a chlorinator will be required that has an initial cost of $8000 and a useful life of 5 years. The chlorine will cost $650 per year, and the labor cost will be $800 per year. Alternatively, dry chlorine can be added manually at a cost of $1000 per year for chlorine and $1900 per year for labor. Which method should be used on the basis of a present worth analysis if the interest rate is 10% per year