The initial cost of a proposed heat recovery system is $375,000. The annual operation andmaintenance costs are projected to be $12,000. The salvage value of the system at the end of itsuseful life (projected to be 30 years) is $60,000. The annual savings in fuel costs resulting fromthis system are estimated to be $55,000 per year.a. Assuming annual compounding, determine the rate of return for this heat recovery system.b. If management has set the MARR to be 15% for a heat recovery system like this, what is themaximum initial cost that can be spent on the system (assuming that all other costs and incomesare the same)?
The initial cost of a proposed heat recovery system is $375,000. The annual operation andmaintenance costs are projected to be $12,000. The salvage value of the system at the end of itsuseful life (projected to be 30 years) is $60,000. The annual savings in fuel costs resulting fromthis system are estimated to be $55,000 per year.a. Assuming annual compounding, determine the rate of return for this heat recovery system.b. If management has set the MARR to be 15% for a heat recovery system like this, what is themaximum initial cost that can be spent on the system (assuming that all other costs and incomesare the same)?
Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
ChapterMA: Math Assessment
Section: Chapter Questions
Problem 1.1MA
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The initial cost of a proposed heat recovery system is $375,000. The annual operation and
maintenance costs are projected to be $12,000. The salvage value of the system at the end of its
useful life (projected to be 30 years) is $60,000. The annual savings in fuel costs resulting from
this system are estimated to be $55,000 per year.
a. Assuming annual compounding, determine the rate of return for this heat recovery system.
b. If management has set the MARR to be 15% for a heat recovery system like this, what is the
maximum initial cost that can be spent on the system (assuming that all other costs and incomes
are the same)?
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