In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches thick in insulating the walls of the cold storage ware house. Heat absorb through the walls without insulation would cost P96.00 per year per square meter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per square meter. Using a life 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?
In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches thick in insulating the walls of the cold storage ware house. Heat absorb through the walls without insulation would cost P96.00 per year per square meter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per square meter. Using a life 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?
Chapter1: Making Economics Decisions
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Transcribed Image Text:4. In a cold storage plant, it is desired to determine whether to use insulation two inches
thick or three inches thick in insulating the walls of the cold storage ware house. Heat
absorb through the walls without insulation would cost P96.00 per year per square
meter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of
the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per
square meter. Using a life 15 years for the insulation with no salvage value and a
minimum attractive return of 8%, what thickness of insulation should be used?
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