Question
In: Economics
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather...
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather conditions. One alternative must be selected. Estimated savings in heat loss and installation cost are given below:
|
Thickness |
Installation cost |
Annual savings |
Maintenace once in each 2 years |
|
2cm |
$222000 |
$80000 |
$3400 |
|
5cm |
$360000 |
$151000 |
0 |
a.) Useful lives of both alternatives are 6 years. Which thickness would you recommend for a MARR= 9% per year and negligible market (salvage) values using Annual Worth Analysis?
b.) Useful life of 2 cm Thickness alternative is 6 years and useful life of 5 cm thickness alternative is 9 years. Which thickness would you recommend for a MARR= 9% per year and negligible market (salvage) values using Annual Worth Analysis? (Use repeatability assumption)
in excel both questions
Solutions
Expert Solution
Using Excel
| interest rate | 9% | |
| a. | For 2 cm thickness | |
| Installation cost | -222000 | |
| Annual savings | 80000 | |
| Maint (every 2 yrs) | -3400.00 | |
| Life | 6 | |
| Present worth | 131603.13 | |
| Annual Worth | 29,336.94 | |
| For 5 cm thickness | ||
| Installation cost | -360000 | |
| Annual savings | 151000 | |
| Maint (every 2 yrs) | 0.00 | |
| Life | 6 | |
| Present worth | 317373.71 | |
| Annual Worth | 70,748.88 | |
| As AW of 5 cm thickness is more, it should be selected | ||
| interest rate | 9% | |
| b. | For 2 cm thickness | |
| Installation cost | -222000 | |
| Annual savings | 80000 | |
| Maint (every 2 yrs) | -3400.00 | |
| Life | 6 | |
| Present worth | 131603.13 | |
| Annual Worth | 29,336.94 | |
| For 5 cm thickness | ||
| Installation cost | -360000 | |
| Annual savings | 151000 | |
| Maint (every 2 yrs) | 0.00 | |
| Life | 9 | |
| Present worth | 545282.28 | |
| Annual Worth | 90,952.43 | |
| As AW of 5 cm thickness is more, it should be selected | ||
Showing formula in Excel
| interest rate | 0.09 | |
| a. | For 2 cm thickness | |
| Installation cost | -222000 | |
| Annual savings | 80000 | |
| Maint (every 2 yrs) | -3400 | |
| Life | 6 | |
| Present worth | =C3+PV(C1,C6,-C4)+PV(C1,2,,-C5)+PV(C1,4,,-C5) | |
| Annual Worth | =PMT(C1,C6,-C7) | |
| For 5 cm thickness | ||
| Installation cost | -360000 | |
| Annual savings | 151000 | |
| Maint (every 2 yrs) | 0 | |
| Life | 6 | |
| Present worth | =C11+PV(C1,C14,-C12) | |
| Annual Worth | =PMT(C1,C14,-C15) | |
| As AW of 5 cm thickness is more, it should be selected | ||
| interest rate | 0.09 | |
| b. | For 2 cm thickness | |
| Installation cost | -222000 | |
| Annual savings | 80000 | |
| Maint (every 2 yrs) | -3400 | |
| Life | 6 | |
| Present worth | =C21+PV(C19,C24,-C22)+PV(C19,2,,-C23)+PV(C19,4,,-C23) | |
| Annual Worth | =PMT(C19,C24,-C25) | |
| For 5 cm thickness | ||
| Installation cost | -360000 | |
| Annual savings | 151000 | |
| Maint (every 2 yrs) | 0 | |
| Life | 9 | |
| Present worth | =C29+PV(C19,C32,-C30) | |
| Annual Worth | =PMT(C19,C32,-C33) | |
| As AW of 5 cm thickness is more, it should be selected |
Rahul Sunny answered 9 months agoRelated Solutions
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather...
Two insulation thickness alternatives have been proposed for a
process steam line subject to severe weather conditions. One
alternative must be selected. Estimated savings in heat loss and
installation cost are given below:
Q: Useful life of 2 cm Thickness alternative is 10 years and
useful life of 5 cm thickness alternative is 5 years. Which
thickness would you recommend for a MARR= 0.13 per year and
negligible market (salvage) values using a)Present
Worth Analysis? b) Annual Worth Analysis? (Use...
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather...
Two insulation thickness alternatives have been proposed for a
process steam line subject to severe weather conditions. One
alternative must be selected. Estimated savings in heat loss and
installation cost are given below:
THICKNESS
INSTALLATION COST
ANNUAL SAVINGS
MAINTENANCE ONCE IN EACH 2 YEARS
2cm
$125000
$62000
$4800
5cm
$408000
$125000
$0
d.) Useful lives of both alternatives are 8 years. Find the best
alternative using Simple Payback Period Method.
IN EXCEL PLZ!!
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather...
Two insulation thickness alternatives have been proposed for a
process steam line subject to severe weather conditions. One
alternative must be selected. Estimated savings in heat loss and
installation cost are given below:
THICKNESS
INSTALLATION COST
ANNUAL SAVINGS
MAINTENANCE ONCE IN EACH 2 YEARS
2cm
$125000
$62000
$4800
5cm
$408000
$125000
$0
b.) Useful life of 2 cm Thickness alternative is 8 years and
useful life of 5 cm thickness alternative is 7 years. Which
thickness would you recommend for...
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather...
Two insulation thickness alternatives have been proposed for a
process steam line subject to severe weather conditions. One
alternative must be selected. Estimated savings in heat loss and
installation cost are given below:
THICKNESS
INSTALLATION COST
ANNUAL SAVINGS
MAINTENANCE ONCE IN EACH 2 YEARS
2cm
$125000
$62000
$4800
5cm
$408000
$125000
$0
a.) Useful lives of both alternatives are 8 years. Which
thickness would you recommend for a MARR= 9% per year and
negligible market (salvage) values using Present Worth...
Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather...
Two insulation thickness alternatives have been proposed for a
process steam line subject to severe weather conditions. One
alternative must be selected. Estimated savings in heat loss and
installation cost are given below:
Useful lives of both alternatives are 10 years. Find the best
alternative using A) simple payback period method
B) discounted payback period when MARR= 0.13 per
year.
Thickness
Installation cost
Annual Savings
Maintenance once in each 2 years
2 cm
$111000
$81000
$4500
5 cm
$367000
$125000...
Two plans have been proposed for a high speed passenger rail line between Cincinnati and Cleveland....
Two plans have been proposed for a high speed passenger rail
line between Cincinnati and Cleveland. The plans are summarized in
the table below. Costs and benefits are in millions of dollars.
Use benefit-cost ratio analysis with an interest rate of 8% to
determine which, if either, of the plans should be accepted.
Identical replacement assumption is applicable.
Plan A
Plan B
Econ. Life (Years)
30
15
Salvage Value
$20
$15
Annual Benefits
$28.5
$22
Annual M&O Cost
$4
$2.5...
Two theories have been proposed regarding the aging process: the rate-of-living theory and the evolutionary theory...
Two theories have been proposed regarding the aging process: the
rate-of-living theory and the evolutionary theory of aging. Compare
and contrast these two theories. Are there any similarities? What
are their differences? Which elements are supported by research,
and which elements have been refuted?
Two proposals for manufacturing a new product have been proposed to the board of directors of...
Two proposals for manufacturing a new product have been proposed
to the board of directors of ‘Salamis’ Ltd. Market research
indicates that there is strong demand for the product.
Proposal 1: The company will acquire plant costing £900,000.
Fixed expenses (other than depreciation) would amount to £570,000
per annum and variable expenses per unit would be £350.
Proposal 2: The company will acquire plant costing £800,000.
Fixed expenses (other than depreciation) would amount to £240,000
per annum and variable expenses...
a. Describe the two mechanisms that have been proposed to explain the rise in sex steroid...
a. Describe the two mechanisms that have been proposed to
explain the rise in sex steroid secretion that occurs at puberty.
Explain the possible effects of body fat and intense the positive
role of melatonin in reproduction.
As a financial analyst at Delhi Systems you have been asked to evaluate two capital alternatives...
As a financial analyst at Delhi Systems you have been asked to
evaluate two capital alternatives submitted by the production
department of the firm. Before beginning you analysis. As a small
business, Delhi pays corporate taxes at the rate of 35%. The
proposed capital project calls for developing new computer software
to facilitate partial automation of production in Delhi’s plant.
Alternative A has initial software development costs estimated at
$185,000, while Alternative B would cost $330,000. Software
development costs would...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Beasley Ball Bearings paid a $4 dividend last year. The dividend is expected to grow at...
- 7. In order to improve the network performance and security, ACLs is recommended. Please explain what...
- Noting that there has been an increasing interest in organic foodstuffs with increasing affluence, Mr Tommy...
- 1. the physical sites at which crossing over occurs are the.... A. chiasmata B. Centrioles C....
- Develop a Java program that determines the gross pay for an employee. The company pays hourly...
- Discuss the four evolving company orientations. Which orientation is considered most successful and why?
- Flexible Budgeting and Variance Analysis I Love My Chocolate Company makes dark chocolate and light chocolate....
ADVERTISEMENT