Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 59

In an effort to reduce pipe breakage, water hammer, and product agitation, a chemical company plans to install several chemically resistant pulsation dampeners. The cost of the dampeners today is $120,000, but the company has to wait until a permit is approved for its bidirectional port to plant product pipeline. The permit approval process will take at least 2 years because of the time required for preparation of an environmental impact statement. Because of intense foreign competition, the manufacturer plans to increase the price only by the inflation rate each year. If the inflation rate is 2.8% per year and the company's MARR is 20% per year, estimate the cost of the dampeners in 2 years in terms of (a) today's dollars and (b) future dollars.