A mechanical engineer must recommend a new heating system to a commercial building owner. The owner intends to sell the building in 15 years. A gas fired furnace option has a design life of 5 years, an initial cost of $11,000, a replacement cost of $6,000 and annual operating costs of $3,500, but adds no value to the building when sold. A geothermal heat pump system has a design life of 10 years, an initial cost of $18,000, a replacement cost of $9,000, annual operating costs of $2,500, and increases the value of the building by $7,000, when it is sold at the end of year 15. Determine the equivalent uniform annual cost (EUAC) of costs for the option the engineer should recommend at an interest rate of 5.7%. Express your answer in $ to the nearest $10.
The two option with cost and benefitas below
Furnace 
Heat pump 

Initial cost 
10000 
19000 
Replacement cost 
6000 
10000 
Annual operating cost 
3500 
2500 
Salvage value 
0 
5000 
The installed cost and relacement cost of both option is givenbelow. If the initial cost is C and replacement cost for ever tyear isR and operating cost is O. Then EUAC is
The value of the house increases by 5000 at the end of 15 years.Then EUAB is
Therefore, EUAC for second option is
The recomendable option should be Heat pump.
A mechanical engineer must recommend a new heating system to a commercial building owner. The owner...
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