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13. (10 pts) FE Exam Problem: Use the FE Annualized Cost basis for evaluation. A company can purchase a feedstock for $1.0/lb. This is Option A. Alternatively, the feedstock can be manufactured internally by investing capital (to build a plant) and manufacturing it there this is Option B. The cost of this Option B is 50E6$ FCI and the cost of manufacture is 0.5$/1b. Option A purchased feedstock and Option B manufactured feedstock have the same quality and are equivalent to customers. Using the Annualized Cost analysis basis, at what production level is the breakeven point for Options A and B? Above this production breakeven point, which option should be chosen? Assume a 15 year project life and 10% interest rate. Do not consider depreciation or taxes. Capital is spent instantaneously at start-up (T=0). Use FE exam tables and indicate columns used (e.g., A/G). Show work below Breakeven Point: Ib/yr At the breakeven point, what is the Annualized Cost? $ Above the breakeven point, which option is better (A or B): 13. (10 pts) FE Exam Problem: Use the FE Annualized Cost basis for evaluation. A company can purchase a feedstock for $1.0/lb. This is Option A. Alternatively, the feedstock can be manufactured internally by investing capital (to build a plant) and manufacturing it there this is Option B. The cost of this Option B is 50E6$ FCI and the cost of manufacture is 0.5$/1b. Option A purchased feedstock and Option B manufactured feedstock have the same quality and are equivalent to customers. Using the Annualized Cost analysis basis, at what production level is the breakeven point for Options A and B? Above this production breakeven point, which option should be chosen? Assume a 15 year project life and 10% interest rate. Do not consider depreciation or taxes. Capital is spent instantaneously at start-up (T=0). Use FE exam tables and indicate columns used (e.g., A/G). Show work below Breakeven Point: Ib/yr At the breakeven point, what is the Annualized Cost? $ Above the breakeven point, which option is better (A or B)

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