Question
A new space heating system is considered for a small office building at Dragon Ball Inc. The new system can be acquired with an initial
A new space heating system is considered for a small office building at Dragon Ball Inc. The new system can be acquired with an initial cost of 750,000 which requires annual maintenance which will cost about $5,000. The new heating system is expected to reduce power consumption by 400,000 kilowatt-hours per year for the entire investment period. The salvage value of this equipment is considered as $20,000 at the end of a 10-year use. Assuming an electricity cost of $0.25 per kilowatt-hour and MARR value of 12%, should Dragon Ball install the new heating system? Create the cost and benefit cash flow structure and calculate net cash flow values for the investment period.
Conduct a financial feasibility analysis by focusing on the annual worth (AW) of investment and Rate of Return (ROR). Complete your analysis on MS Excel.
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