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A company must purchase one reactor to be used in an overall operation. Four reactors have been designed, all of which are equally capable of
A company must purchase one reactor to be used in an overall operation. Four reactors have been designed, all of which are equally capable of giving the required service. The following data apply to the four designs: 3. Design 2Design 3 Design 4 $16,000 Design 1 Fixed-Capital $10,000 Investment Sum of after-tax $3,000 operating and fixed costs per year (all other costs are constant $12,000 $14,000 $2,800 $2,350 $2,100 If the company demands a 15% return after taxes on any unnecessary investment, which of the four designs should be accepted? 4. An uninsulated heat exchanger is losing heat to its surroundings, which is raising the utility bills of your company. Your boss has suggested insulating the heat exchanger. There is an economic tradeoff between the money saved from the heating bills and the money spent on insulation. How thick should the insulation be? Your company expects a 15% return on all investments. The net annual savings (NAS) and the installed cost (TC) can be approximated as NAS13,498t 6745t 137 IC (S) 15,708t+9425t Where t is the insulation thickness in meters
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