A small heat pump now costs $2,500 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $100 per year in real (year-zero) dollars over the useful life. These costs are projected to increase at 5% per year, which is the expected general inflation rate. The annual cost of electricity for the heat pump is $720 in year-zero dollars. Electricity prices are projected to increase at an annual rate of 9%. The firm's MARR, which includes an allowance for general price inflation, is 18% per year (im). No market value is expected from the heat pump at the end of the 15 years of service life. Click the icon to view the interest and annuity table for discrete compounding when i= 18% per year. ... a. What is the PW of owning and operating the heat pump? The PW is $8702|. (Round to the nearest dollar.) b. (i) What is the AW, expressed in actual dollars, of owning and operating the heat pump? The AW is $ 1709|. (Round to the nearest dollar.) Gi) What is the AW in roal dollars of owning and onorating the boat pump?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Discrete Compounding; i= 18%
Single Payment
Uniform Series
Capital
Recovery
Compound
Compound
Sinking
Amount
Present
Amount
Present
Fund
Factor
Worth Factor
Factor
Worth Factor
Factor
Factor
To Find F
To Find P
To Find F
To Find P
To Find A
To Find A
Given P
Given F
Given A
Given A
Given F
Given P
F/P
P/F
FIA
PIA
A/F
A/P
1
1.1800
0.8475
1.0000
0.8475
1.0000
1.1800
2
1.3924
0.7182
2.1800
1.5656
0.4587
0.6387
3
1.6430
0.6086
3.5724
2.1743
0.2799
0.4599
4
1.9388
0.5158
5.2154
2.6901
0.1917
0.3717
5
2.2878
0.4371
7.1542
3.1272
0.1398
0.3198
6
2.6996
0.3704
9.4420
3.4976
0.1059
0.2859
7
3.1855
0.3139
12.1415
3.8115
0.0824
0.2624
8
3.7589
0.2660
15.3270
4.0776
0.0652
0.2452
9
4.4355
0.2255
19.0859
4.3030
0.0524
0.2324
10
5.2338
0.1911
23.5213
4.4941
0.0425
0.2225
11
6.1759
0.1619
28.7551
4.6560
0.0348
0.2148
12
7.2876
0.1372
34.9311
4.7932
0.0286
0.2086
13
8.5994
0.1163
42.2187
4.9095
0.0237
0.2037
14
10.1472
0.0985
50.8180
5.0081
0.0197
0.1997
15
11.9737
0.0835
60.9653
5.0916
0.0164
0.1964
Transcribed Image Text:More info Discrete Compounding; i= 18% Single Payment Uniform Series Capital Recovery Compound Compound Sinking Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor Factor To Find F To Find P To Find F To Find P To Find A To Find A Given P Given F Given A Given A Given F Given P F/P P/F FIA PIA A/F A/P 1 1.1800 0.8475 1.0000 0.8475 1.0000 1.1800 2 1.3924 0.7182 2.1800 1.5656 0.4587 0.6387 3 1.6430 0.6086 3.5724 2.1743 0.2799 0.4599 4 1.9388 0.5158 5.2154 2.6901 0.1917 0.3717 5 2.2878 0.4371 7.1542 3.1272 0.1398 0.3198 6 2.6996 0.3704 9.4420 3.4976 0.1059 0.2859 7 3.1855 0.3139 12.1415 3.8115 0.0824 0.2624 8 3.7589 0.2660 15.3270 4.0776 0.0652 0.2452 9 4.4355 0.2255 19.0859 4.3030 0.0524 0.2324 10 5.2338 0.1911 23.5213 4.4941 0.0425 0.2225 11 6.1759 0.1619 28.7551 4.6560 0.0348 0.2148 12 7.2876 0.1372 34.9311 4.7932 0.0286 0.2086 13 8.5994 0.1163 42.2187 4.9095 0.0237 0.2037 14 10.1472 0.0985 50.8180 5.0081 0.0197 0.1997 15 11.9737 0.0835 60.9653 5.0916 0.0164 0.1964
A small heat pump now costs $2,500 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $100 per year in real
(year-zero) dollars over the useful life. These costs are projected to increase at 5% per year, which is the expected general inflation rate. The annual cost of electricity
for the heat pump is $720 in year-zero dollars. Electricity prices are projected to increase at an annual rate of 9%. The firm's MARR, which includes an allowance for
general price inflation, is 18% per year (im). No market value is expected from the heat pump at the end of the 15 years of service life.
Click the icon to view the interest and annuity table for discrete compounding when i= 18% per year.
a. What is the PW of owning and operating the heat pump?
The PW is $ 8702|. (Round to the nearest dollar.)
b. (i) What is the AW, expressed in actual dollars, of owning and operating the heat pump?
The AW is $ 1709. (Round to the nearest dollar.)
(ii) What is the AW in real dollars of owning and operating the heat pump?
The AW is $2131. (Round to the nearest dollar.)
Transcribed Image Text:A small heat pump now costs $2,500 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $100 per year in real (year-zero) dollars over the useful life. These costs are projected to increase at 5% per year, which is the expected general inflation rate. The annual cost of electricity for the heat pump is $720 in year-zero dollars. Electricity prices are projected to increase at an annual rate of 9%. The firm's MARR, which includes an allowance for general price inflation, is 18% per year (im). No market value is expected from the heat pump at the end of the 15 years of service life. Click the icon to view the interest and annuity table for discrete compounding when i= 18% per year. a. What is the PW of owning and operating the heat pump? The PW is $ 8702|. (Round to the nearest dollar.) b. (i) What is the AW, expressed in actual dollars, of owning and operating the heat pump? The AW is $ 1709. (Round to the nearest dollar.) (ii) What is the AW in real dollars of owning and operating the heat pump? The AW is $2131. (Round to the nearest dollar.)
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