A small heat pump now costs $2,800 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $125 per year in real (year-zero) dollars over the useful life. These costs are projected to increase at 6% 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 8%. The firm's MARR, which includes an allowance for general price inflation, is 15% 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 = 15% per year. ..... a. What is the PW of owning and operating the heat pump? The PW is $. (Round to the nearest dollar.)
A small heat pump now costs $2,800 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $125 per year in real (year-zero) dollars over the useful life. These costs are projected to increase at 6% 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 8%. The firm's MARR, which includes an allowance for general price inflation, is 15% 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 = 15% per year. ..... a. What is the PW of owning and operating the heat pump? The PW is $. (Round to the nearest dollar.)
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter2: The One Lesson Of Business
Section: Chapter Questions
Problem 2.6IP
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![A small heat pump now costs $2,800 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $125 per year in
real (year-zero) dollars over the useful life. These costs are projected to increase at 6% 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 8%. The firm's MARR, which includes an
allowance for general price inflation, is 15% 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= 15% per year.
.....
a. What is the PW of owning and operating the heat pump?
The PW is $- (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 $
(Round to the nearest dollar.)
(ii) What is the AW in real dollars of owning and operating the heat pump?
The AW is $ . (Round to the nearest dollar.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F27687905-349c-44e7-8004-3c722e0bda71%2Fff2a7295-41b8-4f30-b971-988ddb06cd30%2F50i65lh_processed.png&w=3840&q=75)
Transcribed Image Text:A small heat pump now costs $2,800 to purchase and install. It has a projected useful life of 15 years and will incur annual maintenance costs of $125 per year in
real (year-zero) dollars over the useful life. These costs are projected to increase at 6% 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 8%. The firm's MARR, which includes an
allowance for general price inflation, is 15% 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= 15% per year.
.....
a. What is the PW of owning and operating the heat pump?
The PW is $- (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 $
(Round to the nearest dollar.)
(ii) What is the AW in real dollars of owning and operating the heat pump?
The AW is $ . (Round to the nearest dollar.)
![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
N
F/P
P/F
FIA
PIA
A/F
A/P
1
1.1500
0.8696
1.0000
0.8696
1.0000
1.1500
1.3225
0.7561
2.1500
1.6257
0.4651
0.6151
1.5209
0.6575
3.4725
2.2832
0.2880
0.4380
1.7490
0.5718
4.9934
2.8550
0.2003
0.3503
2.0114
0.4972
6.7424
3.3522
0.1483
0.2983
6.
2.3131
0.4323
8.7537
3.7845
0.1142
0.2642
7
2.6600
0.3759
11.0668
4.1604
0.0904
0.2404
8
3.0590
0.3269
13.7268
4.4873
0.0729
0.2229
9.
3.5179
0.2843
16.7858
4.7716
0.0596
0.2096
10
4.0456
0.2472
20.3037
5.0188
0.0493
0.1993
11
4.6524
0.2149
24.3493
5.2337
0.0411
0.1911
12
5.3503
0.1869
29.0017
5.4206
0.0345
0.1845
13
6.1528
0.1625
34.3519
5.5831
0.0291
0.1791
14
7.0757
0.1413
40.5047
5.7245
0.0247
0.1747
15
8.1371
0.1229
47.5804
5.8474
0.0210
0.1710
16
9.3576
0.1069
55.7175
5.9542
0.0179
0.1679
17
10.7613
0.0929
65.0751
6.0472
0.0154
0.1654
18
12.3755
0.0808
75.8364
6.1280
0.0132
0.1632
19
14.2318
0.0703
88.2118
6.1982
0.0113
0.1613
20
16.3665
0.0611
102.4436
6.2593
0.0098
0.1598
Print
Done](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F27687905-349c-44e7-8004-3c722e0bda71%2Fff2a7295-41b8-4f30-b971-988ddb06cd30%2Ffonrikp_processed.png&w=3840&q=75)
Transcribed Image Text: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
N
F/P
P/F
FIA
PIA
A/F
A/P
1
1.1500
0.8696
1.0000
0.8696
1.0000
1.1500
1.3225
0.7561
2.1500
1.6257
0.4651
0.6151
1.5209
0.6575
3.4725
2.2832
0.2880
0.4380
1.7490
0.5718
4.9934
2.8550
0.2003
0.3503
2.0114
0.4972
6.7424
3.3522
0.1483
0.2983
6.
2.3131
0.4323
8.7537
3.7845
0.1142
0.2642
7
2.6600
0.3759
11.0668
4.1604
0.0904
0.2404
8
3.0590
0.3269
13.7268
4.4873
0.0729
0.2229
9.
3.5179
0.2843
16.7858
4.7716
0.0596
0.2096
10
4.0456
0.2472
20.3037
5.0188
0.0493
0.1993
11
4.6524
0.2149
24.3493
5.2337
0.0411
0.1911
12
5.3503
0.1869
29.0017
5.4206
0.0345
0.1845
13
6.1528
0.1625
34.3519
5.5831
0.0291
0.1791
14
7.0757
0.1413
40.5047
5.7245
0.0247
0.1747
15
8.1371
0.1229
47.5804
5.8474
0.0210
0.1710
16
9.3576
0.1069
55.7175
5.9542
0.0179
0.1679
17
10.7613
0.0929
65.0751
6.0472
0.0154
0.1654
18
12.3755
0.0808
75.8364
6.1280
0.0132
0.1632
19
14.2318
0.0703
88.2118
6.1982
0.0113
0.1613
20
16.3665
0.0611
102.4436
6.2593
0.0098
0.1598
Print
Done
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