7.2 In Table 7.2, a waste-burning boiler was described. Assume the ca- pacity of this boiler is 28,000 lb/h. Suppose that these figures are 5 years old, that your company is contemplating the purchase of such a boiler, and that it is planned to save twice the energy amounts and have twice the capacity of the given boiler. The energy cost has been inflating at 10% per year, base construction costs have been inflating at 6%/year, the basic inflation rate of the economy has been 5%, and without inflation the cost of constructing a unit is R.73 multiplied by the cost of the existing unit, where R is the ratio between the capacity of the proposed unit and the capacity of the present unit. The tax rate of the company is 34%. The unit is subject to the 5-year depreciation schedule shown in Table 4-6. What is the after-tax present worth of the first 5 years of cash flows associated with this investment if the company uses a constant-dollar after-tax rate of return of 8% on this kind of investment? Fuel Table 7-2. Examples of Composition of Non-traditional Fuels Sulfur Hydro-Carbon Compo Moisture Ash Heating (S) gen (C) nent (H0) Value (H) Oxygen (Btu/lb) (O) Pine bark (dry basis) 0.1% 5.6% 53.4% 37.9% (50%) 2.9% 9,030 Natural gas 23.3 74.72 1.22 22,904 (0.76 %N) Fuel oil No. 6 12.0 10.5 85.7 0.92 2.0 0.08 18,270 Coke breeze 0.6 0.3 80.0 0.5 7.3 11.0 11,670 Bagasse 2.8 23.4 20.0 52.0 1.7 4,000 3.4 23.4- Municipal garbage 0.1 (metals removed) 0.4 Source: References 1 and 6. 15.4- 31.3 19.7- 31.3 9.4- 26.8 3100- 6500 6.3 42.8 3-year Table 4-6. MACRS Percentages for 3-,5-, and 7-year Property Year 5-year 7-year 1 33.33% 20% 14.29% 2. 44.45% 32% 24.49% 3 14.81% 19.2% 17.49% 4 7.41% 11.52% 12.49% 5 11.52% 8.93% 6 5.76% 8.92% 7 8.93% 8 4.46% 7.2 In Table 7.2, a waste-burning boiler was described. Assume the ca- pacity of this boiler is 28,000 lb/h. Suppose that these figures are 5 years old, that your company is contemplating the purchase of such a boiler, and that it is planned to save twice the energy amounts and have twice the capacity of the given boiler. The energy cost has been inflating at 10% per year, base construction costs have been inflating at 6%/year, the basic inflation rate of the economy has been 5%, and without inflation the cost of constructing a unit is R.73 multiplied by the cost of the existing unit, where R is the ratio between the capacity of the proposed unit and the capacity of the present unit. The tax rate of the company is 34%. The unit is subject to the 5-year depreciation schedule shown in Table 4-6. What is the after-tax present worth of the first 5 years of cash flows associated with this investment if the company uses a constant-dollar after-tax rate of return of 8% on this kind of investment? Fuel Table 7-2. Examples of Composition of Non-traditional Fuels Sulfur Hydro-Carbon Compo Moisture Ash Heating (S) gen (C) nent (H0) Value (H) Oxygen (Btu/lb) (O) Pine bark (dry basis) 0.1% 5.6% 53.4% 37.9% (50%) 2.9% 9,030 Natural gas 23.3 74.72 1.22 22,904 (0.76 %N) Fuel oil No. 6 12.0 10.5 85.7 0.92 2.0 0.08 18,270 Coke breeze 0.6 0.3 80.0 0.5 7.3 11.0 11,670 Bagasse 2.8 23.4 20.0 52.0 1.7 4,000 3.4 23.4- Municipal garbage 0.1 (metals removed) 0.4 Source: References 1 and 6. 15.4- 31.3 19.7- 31.3 9.4- 26.8 3100- 6500 6.3 42.8 3-year Table 4-6. MACRS Percentages for 3-,5-, and 7-year Property Year 5-year 7-year 1 33.33% 20% 14.29% 2. 44.45% 32% 24.49% 3 14.81% 19.2% 17.49% 4 7.41% 11.52% 12.49% 5 11.52% 8.93% 6 5.76% 8.92% 7 8.93% 8 4.46%