A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. Theinsulated area is 1,550 square feet. The upgrade from R-11 to R-19 insulation costs $0.05 per square foot. The upgraded insulation isexpected to save Ms. Dee Young approximately 440 kilowatt hours of energy usage per year. The planning horizon is 22 years andelectricity costs $0.10/kWh. MARR is 11% per year. The builder has just announced a new option for Ms. Dee Young to consider. If a homeowner has selected the R-19 insulation, thebuilder will upgrade the insulation to R-30 for an additional $200. The R-30 insulation will save an additional 250 kWh per yearover the R-19 insulation. Is this second insulation upgrade economically attractive based on future worth analysis? The lifeexpectancy, electricity costs, and MARR remain at 22 years, $0.10/kWh, and 11% per year, respectively.Click here to access the TVM Factor Table Calculator.The future worth of R-30 insulation is $Carry all interim calculations to 5 decimal places and then round your fin answer to 2 decimal places. The tolerance is ±0.15.R-30 insulationattractive.

Future worth is a value of an investment or asset on a particular date in the future. To put it…

A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,550 square feet. The upgrade from R-11 to R-19 insulation costs $0.05 per square foot. The upgraded insulation expected to save Ms. Dee Young approximately 440 kilowatt hours of energy usage per year. The planning horizon is 22 years and electricity costs $0.10/kWh. MARR is 11% per year.

A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,550 square feet. The upgrade from R-11 to R-19 insulation costs $0.05 per square foot. The upgraded insulation expected to save Ms. Dee Young approximately 440 kilowatt hours of energy usage per year. The planning horizon is 22 years and electricity costs $0.10/kWh. MARR is 11% per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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