A company is considering installing a solar heating system in its manufacturing plant for space and...
A company is considering installing a solar heating system in its manufacturing plant for space and hot water hearing. There are three possible alternatives as given in the Table below:
|
A |
B |
C |
|
|
Solar Collector Area |
2,500 ft2 |
3,500ft2 |
4,500 ft2 |
|
Storage tank |
1,500 gal |
1,500 gal |
3,000 gal |
|
Installed Cost |
$20,000 |
$25,000 |
$50,000 |
|
Maintenance Cost |
$2,500 |
$2,000 |
$1,500 |
|
Annual savings |
35% |
60% |
85% |
|
Useful life |
10 years |
10 years |
10 years |
|
Salvage value |
0 |
0 |
$5,000 |
Note that the possible energy savings is a function of the size of the solar system installed. It has been determined that the annual heating cost for the plant is worth about $10,000. Use the Present Worth method with i=0 to determine the best alternative.
Homework Answers
| Solar Area(fts) | 2500.00 | 3500.00 | 4500.00 | A | 0.0 | 1.0 | 2.0 | 3.0 | 4.0 | 5.0 | 6.0 | 7.0 | 8.0 | 9.0 | 10.0 | ||
| Tank Capacity(gals) | 1500.00 | 1500.00 | 3000.00 | 50000.0 | 40550.5 | 32886.9 | 26671.6 | 21630.9 | 17542.9 | 14227.5 | 11538.6 | 9357.9 | 7589.4 | 6155.1 | 4991.8 | ||
| Installation Cost | 20000.00 | 25000.00 | 50000.00 | 0.2 | 5000.0 | ||||||||||||
| Maintenance Cost | 2500.00 | 2000.00 | 1500.00 | B | 0.0 | 1.0 | 2.0 | 3.0 | 4.0 | 5.0 | 6.0 | 7.0 | 8.0 | 9.0 | 10.0 | ||
| Annual Heating Cost | 10000.00 | 10000.00 | 10000.00 | 25000.0 | 10000.0 | 4000.0 | 1600.0 | 640.0 | 256.0 | 102.4 | 41.0 | 16.4 | 6.6 | 2.6 | 1.0 | ||
| Total Variable Expense | 12500.00 | 12000.00 | 11500.00 | 0.6 | 0.0 | ||||||||||||
| Total Fixed Expense | 20000.00 | 25000.00 | 50000.00 | C | 0.0 | 1.0 | 2.0 | 3.0 | 4.0 | 5.0 | 6.0 | 7.0 | 8.0 | 9.0 | 10.0 | ||
| Annual Depreciation | 60% | 60% | 18.9% | 20000.0 | 8000.0 | 3200.0 | 1280.0 | 512.0 | 204.8 | 81.9 | 32.8 | 13.1 | 5.2 | 2.1 | 0.8 | ||
| Annual Savings | 35% | 60% | 80% | 0.6 | 0.0 | ||||||||||||
| years to recover Cost | NA | 8.33 | 1.75 | ||||||||||||||
| Amount saved in 1yr | -5500 | 3000 | 28500 | ||||||||||||||
| Amount saved in 10yr | -55000 | 30000 | 285000 | ||||||||||||||
| Useful Life | 10.00 | 10.00 | 10.00 | ||||||||||||||
| Salvage Value | 0.00 | 0.00 | 5000.00 |
C is the Best Alternative
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