An energy audit of a residential heating system reveals that the boiler-burner efficiency is only 60 percent. In addition, the energy audit showed that an electric water heater is used. The house uses 1,500 gallons of oil annually at a cost of $1.40/gallon. The total electric bill averages $84.50/month for an average monthly consumption of 818 kWh. Of this total, about 35 percent is for domestic water heating. It is suggested to the owner of the house to equip the boiler with a tankless domestic water heater, replacing the existing electric water heater. The existing water heater is 12 years old and has no resale value and little expected life. The owner of the house is expected to spend $300 within the coming year to replace the electric water heater. The cost of the tankless heater is $400. To improve heating efficiency, it is suggested to:

i. Replace the existing burner with a new one (this burner replacement will improve efficiency to 65 percent) costing $520.

ii. Replace the entire heating plant with higher efficiency (85 percent) with a cost of $2,000.

For two discount rates (5 percent and 10 percent), provide the LCC analysis of the following options and make the appropriate recommendations:

• Keep the boiler-burner and replace the electric water heater with like system.

• Replace the burner and electric water heater with like systems.

• Replace the boiler-burner with an efficient boiler and replace the electric heater with a like system.

• Replace the existing boiler-burner and the electric water heater with new boiler/tankless domestic water heater.