Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, could you solve this? EfciencyEconomic Analysis (Capital Investment Analysis) The Y company is considering a process machine replacement that is intended to save energy,

image text in transcribedimage text in transcribed

Hello, could you solve this?

image text in transcribedimage text in transcribed
EfciencyEconomic Analysis (Capital Investment Analysis) The Y company is considering a process machine replacement that is intended to save energy, while increasing annual production by 5,000 units over the current level, which is 25,000 units per year. The prot margin on a unit is $25. Cun'ent Machine: 150 kW load; 24 hours/day x 5 days/wk x 52 weeks per year. The weekend load is 10 kw (for the other two days in the week @ 24 hrs per day). The current machine is expected to have a market value of $10,000 in four years. In order to meet the additional annual production of 30,000 units, the current machine would have to add Saturday (150 kw @ 24 hrs/day) to the new work week going fomard. Proposed Machine 1: Initial cost for this machine including installation is $75,000, with a market value in 4 years of $20,000. Proposed Machine 1 will produce the following load prole and produce 30,000 units per year. Over a 24-hour day: (100 kw load for 4 hours, 75 kw for 10 hours, and 50 kW for 10 hours) x 5 days/week x 52 weeks per year. The weekend load is 5 kW (for the other 2 days in the week @ 24 hrs/day). Proposed Machine 2: Initial cost for this machine including installation is $150,000, with a market value in 4 years of $29,000. Proposed Machine 2 will produce the following load prole and produce 30,000 units per year. Over a 24-hour day: (60 kw load for 24 hours) x 5 days/week x 52 weeks per year. The weekend load is 5 kW (for the other 2 days in the week @ 24 hrs/day). The local utility offers a one-time up-front rebate of $200 per kw load reduction and a $0.15 one-time rebate per kWh reduction over the rst year of operation. The local utility costs are summarized below (the cost is set for the entire year at the rst of the year, but modeled on an end-ofyear convention): Starting Now Year 1 Year 2 Year 3 kWh cost offpeak $0.07 $0.09 $0.11 $0.13 kWh cost onpeak $0.15 $0.20 $0.25 $0.30 kW cost offpeak $8.00 $9.00 $10.00 $12.00 kW cost onpeak $20.00 $30.00 $40.00 $50.00 In reference to the table above, the peak billing period is from June 1 to August 30 each year. On and off-peak rates are 24 hours per day, depending on the time of year. Note: Many electric utilities charge higher rates in the summer due to higher energy and demand loads caused by air conditioning and the increased loads on all refrigeration systems. See the important note and URLs at the bottom of this page.** Note: We are using a 4-year time horizon. Your Task a. Develop a simple payback for the proposed system alternatives (page 1). Y- company requires a two-year payback period for implementation-what is your recommendation? b. Develop a net present worth for the proposed systems (p. 1); assume a hurdle rate of 10% annual. What is your recommendation? c. Compare and contrast the two methods (a. and b.) of economic analysis. d. Develop a partial productivity for energy metric and calculate for each alternative (p. 1). e. Develop an energy intensity metric and calculate for each alternative (p. 1). f. Compare & contrast the two methods (d. and e.) of expressing energy impact

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Financial Planning

Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk

14th edition

978-1305887725, 1305887727, 1305636619, 978-1305636613

More Books

Students also viewed these Finance questions