7-4.In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the walls without insulation would cost P96.00 per year per square meter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per square meter. Using a life of 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?
7-4.In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the walls without insulation would cost P96.00 per year per square meter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per square meter. Using a life of 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![7-4.In a cold storage plant, it is desired to determine whether to use insulation two inches thick or
three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the
walls without insulation would cost P96.00 per year per square meter. A two-inch insulation will
cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out
92% of the loss and will cost P65.00 per square meter. Using a life of 15 years for the insulation
with no salvage value and a minimum attractive return of 8%, what thickness of insulation should
be used?
Given:
Wall Thickness
Two-inches
Three-inches
Without insulation
96.00
96.00
Without insulation, per mª
30.40
65.00
Heat Loss
89%
92%
Interest on investment
8%
8%
Net Salvage value
Life, years
15
15](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7338972c-6533-46c4-a831-11131ec379c5%2F16d83b67-1c0b-439e-9c8b-670effa3d460%2Faeekrc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:7-4.In a cold storage plant, it is desired to determine whether to use insulation two inches thick or
three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the
walls without insulation would cost P96.00 per year per square meter. A two-inch insulation will
cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out
92% of the loss and will cost P65.00 per square meter. Using a life of 15 years for the insulation
with no salvage value and a minimum attractive return of 8%, what thickness of insulation should
be used?
Given:
Wall Thickness
Two-inches
Three-inches
Without insulation
96.00
96.00
Without insulation, per mª
30.40
65.00
Heat Loss
89%
92%
Interest on investment
8%
8%
Net Salvage value
Life, years
15
15
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