EOY 0 1 2 3 - A single zone heating unit is being used in a small office building. A variable air volume system retrofit can be purchased and installed for a cost of $100,000. The retrofit system is estimated to save 450,000 kilowatt hours per year for its economic life of 10 years. The company uses a MARR of 10%. If the company pays $0.06 per kWh for electricity, and the system will have a salvage value of $500 at the end of its life, should the new system be purchased? * The cash flow table for this example is shown below, in tabular form. - Analyze the options and recommend the more cost-effective option using the following methods: Simple Payback (SPB) Present Worth or Net Present Value (NPV) Benefit to Cast Ratio (BCR) Internal Rate of Return (IRR) 4 Cash flow -$100,000 450,000 kWh ($0.06/kWh $27,000 $27,000 $27.000 $27,000 $27,000 $27,000 $27,000 $27.000 $27,000 $27.000 + 500 - $27,500 5 6 7 8 9 10