Question
A double pipe heat exchanger with steam in the shell is to be insulated to reduce heat loss to the surroundings. The thickness of insulation,
A double pipe heat exchanger with steam in the shell is to be insulated to reduce heat loss to the surroundings. The thickness of insulation, initial cost and projected annual cost of heat loss are given in the following table. If the minimum ROR is 20% before taxes, determine the optimum thickness of insulation for an insulation life of six years with no salvage value.
Insulation Thickness (inches) | Initial Cost ($) | Annual Heat Loss Cost ($) |
0 | 0 | 1400 |
1 | 1200 | 800 |
2 | 1800 | 600 |
3 | 2500 | 500 |
4 | 3500 | 400 |
Base your results on Present Worth Cost Analysis and verify that result with incremental NPV calculations. all steps and formula included
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