A New Water Treatment Operation Is Being Considered for the New

Essay

A new water treatment operation is being considered for the new automated water treatment plant in South Africa. The system can be purchased and installed for $44.5 million and requires additional annual operating and maintenance expenses of $2.7 million over a 22- year period. However, it will save an estimated $5.7 million each year from the reduced operational, environmental, and security risks. The company uses a MARR of 12 percent per year in its economic evaluations of the new system. The market value of the system will be $4.45 million at the end of 22 years. Write the correct equation to determine if this system should be installed using the IRR method.