The faculty office area in the Antonio Lucchetti building has problems associated with the air conditioning system. Currently the existing system is centrifugal. The Department of Buildings and Land is evaluating two alternatives to address the situation.

The first alternative is to replace the 50-ton chiller, the handler system and its insulating system.

The initial costs are as follows:

Unit	Cost	Life
Centrifuge 50 tons	$33,000	15 years
Handlers	$47,000	30 years
Work for installation*	$1,400	n/a
Materials for initial installation **	$2,500	n/a
Isolation system	$22,000	n/a

*Reduced to 40% of original cost in case of equipment replacement.

** The cost of replacement materials is also assumed to be 40% of the original cost.

The maintenance of the centrifuge consists of

Maintenance work	Personnel requirements	Duration of work	Monthly salary	Cost
Cleaning every 6 months	1 technician 1 helper	1 day	$1,550 $1,515
Annual water pump maintenance	1 technician 1 helper	1/2 day	$1,550 $1,515
Annual manufacturer's visit				$1,000
I replace fans every three years	1 technician 1 helper	1 hour	$1,550 $1,515	$150

The maintenance is carried out by staff of the Refrigeration Workshop attached to the Department of Buildings and Land of the land. The total number of hours a regular employee works in the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (You must calculate the cost associated with the time that staff spendon the maintenance of these particular equipment.)

The additional costs associated with the operation of the centrifuge are as follows

Cost item	Frequency	Cost
Replacing cold water pipe isolated	Every 6 years	$22,000

The costs associated with electricity consumption to the centrifuge system are as follows:

• The daily electricity consumption cost of a 50-ton centrifuge is$150 per day.

• The cost for electric consumption of the handle is $25 a day.

The centrifuge system operates continuously.

The second alternative is the installation of a system of individual units consisting of four capacitors and 41 consoles.

The initial costs are as follows:

Cost item	Unit cost	Units	Total cost	Life
Condenser MDV 400	$9,000	2		6 years old
Condenser MDV 450	$9,700	2		6 years old
Consoles 12,000 BTU	$700	31		6 years old
Consoles 19,000 BTU	$900	10		6 years old
Materials***			$35,000	n/a
Work for installation****			$18,000	n/a

***Includes materials for the insulation system. The cost of materials for the replacement of the consoles is obvious.

****Replacement work is reduced to 80% of the original cost..

System maintenance consists of

Maintenance work	Personnel requirements	Units	Duration of work	Monthly salary	Cost parts to replace
Console cleaning and filter replacement once a year	1 technician 1 helper	41	1.5 hours	$1,550 $1,515	$30/unit
Condenser cleaning once a year	1 technician 1 helper	4	1 hour	$1,550 $1,515
Replacement console removal pump, every 3 years	1 technician 1 helper	41	1/4 day	1 technician 1 helper	$50/unit

The maintenance is carried out by staff of the Refrigeration Workshop Attached To the Department of Buildings and Land of the land. The total number of hours a regular employee works in the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (You must calculate the cost associated with the time staff spend on the maintenance of these particular equipment.)

The additional costs associated with operating the console system are as follows

Cost item	Frequency	Cost
Refrigerant pipe insulation replacement	Every 12 years	$12,000

The costs associated with console system power consumption are as follows:

• The cost for electricity consumption of the complete console system is$175 per day, at the rate of 12 hours per day.

Presumes that the system will operate for 260 working days annually.

(Problem starts bellow)

1. Consider that the equipment will be purchased by a manufacturing industry.

a. Determine the internal rate of return at which both alternatives are equally attractive.

b. Assume that the previously analyzed console system will be used to provide air conditioning in a manufacturing industry that generates a taxable income of $3,000,000 to $5,000,000 per year. It will be installed in a certain production area that generates an income of$450,000 gross per year. Operating costs are $125,000 per year. Depreciate the console system, in operational condition, using the Battery Recovery Modified System And determine the cash flow after tax. Calculate the internal return rate before and after taxes. Perform the scan only for the first time the computer is installed (First cycle, depending on life)

--Hi, I know its long and if needed be I can divide it in multiple questions. What I need to understand is what's marked in bold. Please write neatly and use all the information NEEDED to answer/explain what is in bold. I want to learn so that I can be able to do this with different exercises. -- any suggestion and/ or more info needed just let me know in the comments. Completely opened. Thank you in advance.