Question

Problem 4 - A simple, direct space heating system is currently being used in a professional medical office complex. An upgraded "variable airvolume system" retrofit can be purchased and installed for \$200,000 (investment cost). Its power savings in the future will be 500,000 kiloWatt hours per year over its estimated life of 8 years. The cost of electricity is $ \$ 0.10 $ per kilo-Watt hour. If the firm's cost of capital is $ 12 \% $ per year and the residual value of the system in 8 years is $ \$ 20,000 $, should the new system be purchased? Use the present worth method.

          Problem 4
- A simple, direct space heating system is currently being used in a professional medical office complex. An upgraded "variable airvolume system" retrofit can be purchased and installed for \$200,000 (investment cost). Its power savings in the future will be 500,000 kiloWatt hours per year over its estimated life of 8 years. The cost of electricity is \( \$ 0.10 \) per kilo-Watt hour. If the firm's cost of capital is \( 12 \% \) per year and the residual value of the system in 8 years is \( \$ 20,000 \), should the new system be purchased? Use the present worth method.

Problem 4
- A simple, direct space heating system is currently being used in a professional medical office complex. An upgraded "variable airvolume system" retrofit can be purchased and installed for $200,000 (investment cost). Its power savings in the future will be 500,000 kiloWatt hours per year over its estimated life of 8 years. The cost of electricity is $ 0.10 per kilo-Watt hour. If the firm's cost of capital is 12 % per year and the residual value of the system in 8 years is $ 20,000, should the new system be purchased? Use the present worth method.

Added by Leah R.

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