A mechanical engineer must recommend an A/C system to a commercial building owner. The owner uses and MARR of 6%, but is not sure how long he will own the building. A conventional split system has a design life of 10 years, a cost of $52.000, and annual operating costs of $15,000. A chilled water system has an initial cost of $68,000 and annual operating costs of $14,000. Assuming each unit has no salvage value and will be identically replaced for the life of the building, determine how long the chilled water system needs to last for it to be the best choice (i.e. determine the breakeven useful life for the chilled water system). Express your answer in years to the nearest whole year.
A mechanical engineer must recommend an A/C system to a commercial building owner. The owner uses and MARR of 6%, but is not sure how long he will own the building. A conventional split system has a design life of 10 years, a cost of $52.000, and annual operating costs of $15,000. A chilled water system has an initial cost of $68,000 and annual operating costs of $14,000. Assuming each unit has no salvage value and will be identically replaced for the life of the building, determine how long the chilled water system needs to last for it to be the best choice (i.e. determine the breakeven useful life for the chilled water system). Express your answer in years to the nearest whole year.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Transcribed Image Text:A mechanical engineer must recommend an A/C system to a commercial building owner. The owner
uses and MARR of 6%, but is not sure how long he will own the building. A conventional split system
has a design life of 10 years, a cost of $52,000, and annual operating costs of $15,000. A chilled
water system has an initial cost of $68,000 and annual operating costs of $14,000. Assuming each
unit has no salvage value and will be identically replaced for the life of the building, determine how
long the chilled water system needs to last for it to be the best choice (i.e. determine the breakeven
useful life for the chilled water system). Express your answer in years to the nearest whole year.
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