A pipeline engineer working in Kuwait for the oil
giant BP wants to perform a present worth analysis on
alternative pipeline routings the first 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.
Installation cost, $ million 215 350
Pumping, operating, security,
$ million per year
22 2
Replacement of valves and
appurtenances in year 25, $ million
30 70
Expected life, years 50 50
Al