A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $95,000, and it will save an estimated 150,000 kilowatt-hours (kWh) of electric power each year over a seven-year period. A kilowatt-hour of electricity costs $0.12, and the company uses a MARR of 12% per year in its economic evaluations of refurbished systems. The market value of the system will be $19,000 at the end of seven years, and additional operating and maintenance expenses are $10,500 per year. Use the benefit-cost method to make a recommendation. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12per year. The conventional B-C ratio of the system is 1.48. (Round to two decimal places.) This B-C ratio indicates that the project is not acceptable
A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $95,000, and it will save an estimated 150,000 kilowatt-hours (kWh) of electric power each year over a seven-year period. A kilowatt-hour of electricity costs $0.12, and the company uses a MARR of 12% per year in its economic evaluations of refurbished systems. The market value of the system will be $19,000 at the end of seven years, and additional operating and maintenance expenses are $10,500 per year. Use the benefit-cost method to make a recommendation. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12per year. The conventional B-C ratio of the system is 1.48. (Round to two decimal places.) This B-C ratio indicates that the project is not acceptable
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A retrofitted space-heating system is being considered for a small office building. The
system can be purchased and installed for $95,000, and it will save an estimated
150,000 kilowatt-hours (kWh) of electric power each year over a seven-year period.
A kilowatt-hour of electricity costs $0.12, and the company uses a MARR of 12% per
year in its economic evaluations of refurbished systems. The market value of the system
will be $19,000 at the end of seven years, and additional operating and maintenance
expenses are $10,500 per year. Use the benefit-cost method to make a
recommendation.
Click the icon to view the interest and annuity table for discrete compounding when
the MARR is 12per year.
The conventional B-C ratio of the system is 1.48. (Round to two decimal places.)
This B-C ratio indicates that the project is not acceptable.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3fc923da-597d-435e-8082-d40f278cf098%2Fdd098f2b-7e15-4590-ba79-db1bd394f7eb%2Fixmh84p_processed.png&w=3840&q=75)
Transcribed Image Text:A retrofitted space-heating system is being considered for a small office building. The
system can be purchased and installed for $95,000, and it will save an estimated
150,000 kilowatt-hours (kWh) of electric power each year over a seven-year period.
A kilowatt-hour of electricity costs $0.12, and the company uses a MARR of 12% per
year in its economic evaluations of refurbished systems. The market value of the system
will be $19,000 at the end of seven years, and additional operating and maintenance
expenses are $10,500 per year. Use the benefit-cost method to make a
recommendation.
Click the icon to view the interest and annuity table for discrete compounding when
the MARR is 12per year.
The conventional B-C ratio of the system is 1.48. (Round to two decimal places.)
This B-C ratio indicates that the project is not acceptable.
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