Calculate the present worth of the project

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Reference no: EM131811923

Shell oil currently operates an oil fracking project with a South Korean oil company. The project will run for the next 13 years with an initial investment of $550,000 and annual operating cost of $85000 for the next 5 years, and $110,000 in years 6, 7, 8, 9 and 10 while in the 11^th year, it is intended to pay 50% of the operating cost in year 6 and a gradient increase of $5000 for the next 2 years. Shell also plans to self some of its equipment used for the fracking at the end of the project life. The salvage value (S) for those equipment which decreases by 10% per year, is estimated by the following equation: S = initial investment times (1 - 0.10)^n; where n is the project life If the project is operated at a MARR of 10%, thus: Determine the engineering economy symbols and the corresponding value for each symbols Construct the cash flow diagram Calculate the present worth of the project Calculate the overall equivalent uniform annual cost of the project Determine the future worth of the project

Reference no: EM131811923

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