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  • A Pipeline Engineer Working in Kuwait For The Oil

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    Zafar Farooq
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    The engineer is performing a present worth analysis to evaluate two alternative pipeline routes - a predominantly land route or an undersea route. The undersea route has higher initial installation costs but lower annual operating costs. Calculating the present worth of each route at a 15% discount rate, the land route has a present worth of $-362 million compared to $-365 million for the undersea route, so the land route should be selected as it is cheaper by $3 million.

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    A Pipeline Engineer Working in Kuwait for the Oil

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    The engineer is performing a present worth analysis to evaluate two alternative pipeline routes - a predominantly land route or an undersea route. The undersea route has higher initial installation costs but lower annual operating costs. Calculating the present worth of each route at a 15% discount rate, the land route has a present worth of $-362 million compared to $-365 million for the undersea route, so the land route should be selected as it is cheaper by $3 million.

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    Attribution Non-Commercial (BY-NC)
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    527 просмотров1 страница

    A Pipeline Engineer Working in Kuwait For The Oil

    Загружено:

    Zafar Farooq
    The engineer is performing a present worth analysis to evaluate two alternative pipeline routes - a predominantly land route or an undersea route. The undersea route has higher initial installation costs but lower annual operating costs. Calculating the present worth of each route at a 15% discount rate, the land route has a present worth of $-362 million compared to $-365 million for the undersea route, so the land route should be selected as it is cheaper by $3 million.

    Авторское право:

    Attribution Non-Commercial (BY-NC)
    Скачайте в формате DOCX, PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 1

    A pipeline engineer working in Kuwait for the oil giant BP wants to perform a present worth analysis on alternative pipeline

    routingsthe fi rst predominately by land and the second primarily undersea. The undersea route is more expensive initially due to extra corrosion protection and installation costs, but cheaper security and maintenance reduces annual costs. Perform the analysis for the engineer at 15% per year. Land Installation cost, $ million 225 Undersea 350

    Pumping, operating, security, $ million per year Replacement of deteriorated pipe, $ million each 25 years

    22

    30

    70-

    Expected life, years

    Infinity

    Infinity

    , PWLand = -215 22(P/A,15%,50) 30(P/F,15%,25) = -215 22(6.6605) 30(0.0304) = $-362.443 ($-362,443,000)4 PWSea = -350 2(P/A,15%,50) 70(P/F,15%,25) = -350 2(6.6605) 70(0.0304) = $-365.449 ($-365,449,000) Select land route by a PW margin of only $3 million

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