Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![5. In a cold storage plant, it is desired to determine whether to
use insulation of two inches or three inches thick in
insulating the walls of the cold storage warehouse. Heat
absorbed through the walls without insulation would cost
Php 96 per year per square meter. Two-inch insulation will
cost Php 30.40 per square meter and will cut out 89% of the
loss. Three-inch insulation will cut out 92% of the loss and
will cost Php 65 per square meter. Using a life of 15 years
for the insulation with no salvage value and a minimum
attractive rate of return of 8%, what thickness of insulation
should be used?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fca8df01f-81dc-4874-ab43-d8f5952b9bfe%2F9b179249-3366-49a7-93a3-5cadbde0b989%2Fbtjoiq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5. In a cold storage plant, it is desired to determine whether to
use insulation of two inches or three inches thick in
insulating the walls of the cold storage warehouse. Heat
absorbed through the walls without insulation would cost
Php 96 per year per square meter. Two-inch insulation will
cost Php 30.40 per square meter and will cut out 89% of the
loss. Three-inch insulation will cut out 92% of the loss and
will cost Php 65 per square meter. Using a life of 15 years
for the insulation with no salvage value and a minimum
attractive rate of return of 8%, what thickness of insulation
should be used?
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