Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please state the assumptions 1. Energy manager at the manufacturing facility is looking towards replacing aging low efficiency furnace unit that is used to heat

image text in transcribed

please state the assumptions

1. Energy manager at the manufacturing facility is looking towards replacing aging low efficiency furnace unit that is used to heat the production floor. Two alternatives are being considered: A. High-efficiency forced air natural gas furnace with a cost of $32,000 that will have a present value resale of $4,500 after 15 years, B. Standard-efficiency natural gas furnace for $23,000 that will have a salvage value of $3,000 at the end of its 15 year life. If the potential savings in terms of reduced natural gas bill for the facility are for option A): $9000 B): $7000 Find the best alternative using the lifecycle cost approach and the BCR (benefit-to-cost-ratio) method. Assume that facility uses a discount rate of 15%. Do they provide the same answer? Why? 1. Energy manager at the manufacturing facility is looking towards replacing aging low efficiency furnace unit that is used to heat the production floor. Two alternatives are being considered: A. High-efficiency forced air natural gas furnace with a cost of $32,000 that will have a present value resale of $4,500 after 15 years, B. Standard-efficiency natural gas furnace for $23,000 that will have a salvage value of $3,000 at the end of its 15 year life. If the potential savings in terms of reduced natural gas bill for the facility are for option A): $9000 B): $7000 Find the best alternative using the lifecycle cost approach and the BCR (benefit-to-cost-ratio) method. Assume that facility uses a discount rate of 15%. Do they provide the same answer? Why

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

Financial Management Theory And Practice

Authors: Prasanna Chandra

9th Edition

9339222571, 978-9339222574

More Books

Students also viewed these Finance questions