Two types of heating systems are considered to provide heat for a 35,000 ft² office building. Cost data for each system is given in Table P6.47.

At 12% interest. which system would be more economical?

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TABLE P6.47 First cost Life Salvage value Annual electricity requirement Cost of electricity Annual operating and maintenance cost Compressor replacement cycle and cost Heat Pump $194,000 15 0 145,000 kWh $0.06 per kWh $3,860 $2,500 every 10 years Geothermal $256,500 15 0 25,590 kWh $0.06 per kWh $3,650 $0