The heat loss through the exterior walls of a certain manufacturing plant is estimated to cost $29,000 at EOY 1. ABC Insulation, Inc., told the owner of the plant that the heat loss can be reduced by 80% if he is willing to spend $401,000 to install its innovative insulation material. The cost of heat loss is expected to rise by $2,100 per year (uniform gradient) after the next year. The owner plans to keep the present building for 15 more years. Assume MARR (minimum acceptable rate of return) is 4% per year.

1. What is the present equivalent value of the cost savings in the reduction of heat loss for these 15 years? Round off your final answer to nearest thousand.
2. Using AW method, would you recommend the owner to install ABCs new insulation material? Why?

ABC Utilities is planning to install solar panels to provide some of the electricity for its groundwater desalting plant. The project would be done in two phases. The first phase will cost $ 2,001,000 at EOY 1 and $1,501,000 at EOY 2.

This investment will result in energy savings (phase 2) of $751,00) at EOY 3, $760,000 at EOY 4, and amounts increasing by $9,000 each year through EOY 10. Assume MARR (minimum acceptable rate of return) is 4% per year.

1. What is the future worth of the energy savings? Round off your final answer to nearest thousand.
2. Using FW method, is the cost of the solar project justified by the energy savings? Why?
3. What is the PW (net present value) of this solar panel project? Round off your final answer to nearest thousand.

Environmentally friendly companies are looking for ways to be less damaging to the environment while saving money with innovative investments in capital equipment. ABC Chemical Company is sponsoring a project to recover much of the energy currently being lost in the primary stage of one of their chemical reactor vessels.

Three mutually exclusive designs are being considered for implementation. The estimated capital requirements and annual savings in operating expenses are given below. Assume a MARR = 10% per year, and the study period is 6 years.

EOY	Design 1	Design 2	Design 3
0	$1,110,000	$1,158,000	$703,000
1-6	$ 258,000 at EOY 1, growing at 6% per year	$ 290,000 at EOY 1, growing by $2,500 per year	$ 197,500 per year starting at EOY 1
Salvage value @EOY 6	$ 20,000	$ 16,000	$ 6,000

1. Find the PW of Design 1. Round off your final answer to nearest thousand.
2. Find the PW of Design 2. Round off your final answer to nearest thousand.
3. Find the PW of Design 3. Round off your final answer to nearest thousand.
4. Which design should be selected? Why?