A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $111,000, and it will save an estimated 320,000 kilowat1-hours (kWh) of electric power each year over a four-year period. A kilowatt-hour of electricity costs $0.12, and the company uses a MARI f 18% per year in its economic evaluations of refurbished systems. The market value of the system will be $6,000 at the end of four years, and additional annual operating and maintenance expenses are negligible. Use the benefit-cost method to make a recommendation. O Click the icon to view the interest and annuity table for discrete compounding when t MARR is 18% per year he benefit-cost ratio of the system with PW is Round to two decimal places.)

A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $111,000, and it will save an estimated 320,000 kilowat1-hours (kWh) of electric power each year over a four-year period. A kilowatt-hour of electricity costs $0.12, and the company uses a MARI f 18% per year in its economic evaluations of refurbished systems. The market value of the system will be $6,000 at the end of four years, and additional annual operating and maintenance expenses are negligible. Use the benefit-cost method to make a recommendation. O Click the icon to view the interest and annuity table for discrete compounding when t MARR is 18% per year he benefit-cost ratio of the system with PW is Round to two decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An electrical energy audit indicates electrical motor consumption is 4 x 106 kWh per year. By upgrading the motor spares with high efficiency motors a 10% savings can be realized. The additional cost for these motors is estimated at $80,000. Assuming an 8 cents per kWh energy charge and 20-year life, is the expenditure justified based on a minimum rate of return of 20% before taxes? Solve the problem using the present worth, annual cost, and payback methods.
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Combined-cycle power plants use two combustion turbines to produceelectricity. Heat from the first turbine’s exhaust is captured to heatwater and produce steam sent to a second steam turbine thatgenerates additional electricity. A 968-megawatt combined-cycle gasfired plant can be purchased for P450 million, has no salvage value,and produces a net cash flow (revenues less expenses) of P50 millionper year over its expected 30-year life.a. If the hurdle rate (MARR) is 14% per year, how profitable aninvestment is this power plant?b. What is the simple payback period for the plant? Is this investmentacceptable?
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Suppose that you have just completed the mechanical design of a high-speed automated palletizer that has an investment cost of $3,800,000. The existing palletizer is quite old and has no salvage value. The market value for the new palletizer is estimated to be $430,000 after nine years. One million pallets will be handled by the palletizer each year during the nine-year expected project life. What net savings per pallet (i.e., total savings less expenses) will have to be generated by the palletizer to justify this purchase in view of a MARR of 18% per year? Use the AW method. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year. The net savings required to be generated by the new palletizer to justify its purchase are $ per pallet (Round to the nearest cent)
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