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As you are the only engineer within the company, you are given the responsibility to evaluate the economic viability of a project where you have
As you are the only engineer within the company, you are given the responsibility to evaluate the economic viability of a project where you have to invest a sum of money to isolate a warchouse and to reduce heat loss. You have identified four (4) options for this energy conservation project. Here are the estimates for the initial investment and the annual saving for each of the identified altematives. To take into account some specific policies of the company, you consider that the four options have the same duration, i.e., five (5) years. The minimum acceptable rate of return (MARR) is 12\% 1. Represent the cash flow for all four options? 2. Use the estimates made to perform an annual worth (AW) evaluation for each option. What is the best option that you recommend using an (AW) analysis? 3. What is the rate of return for each option? 4. Determine which option should be selected if you are using the rate of return analysis. 5. If the life duration of all alternatives changes from 5 years to infinite (For alternative A, for example, you will invest $30,000 and you will save $10,500 per year forever). Will your recommendation change if you compare it with your answer in question 2? Justify your answer. As you are the only engineer within the company, you are given the responsibility to evaluate the economic viability of a project where you have to invest a sum of money to isolate a warchouse and to reduce heat loss. You have identified four (4) options for this energy conservation project. Here are the estimates for the initial investment and the annual saving for each of the identified altematives. To take into account some specific policies of the company, you consider that the four options have the same duration, i.e., five (5) years. The minimum acceptable rate of return (MARR) is 12\% 1. Represent the cash flow for all four options? 2. Use the estimates made to perform an annual worth (AW) evaluation for each option. What is the best option that you recommend using an (AW) analysis? 3. What is the rate of return for each option? 4. Determine which option should be selected if you are using the rate of return analysis. 5. If the life duration of all alternatives changes from 5 years to infinite (For alternative A, for example, you will invest $30,000 and you will save $10,500 per year forever). Will your recommendation change if you compare it with your answer in question 2? Justify your
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