The teachers' office area in the Jose Mendez building has problems associated with the air conditioning system. Currently the existing system is of centrifuge. The Buildings and Grounds Department is evaluating two alternatives to address the situation. The alternative consists of the installation of a system of individual units consisting of four condensers and 41 consoles. Units Total Cost Useful life The initial costs are as follows: Cost item Unitary Cost Condenser MDV 400 $9,000 Condenser MDV 450 $9,700 Consoles 12,000 BTU $700 Consoles 19,000 BTU $900 Materials*** Work for installation concept**** 2 2 31 10 6 years 6 years 6 years 6 years $35,000 $18,000 n/a n/a *** Includes materials for the insulation system. The cost of materials for the replacement of the consoles is obviated. **** Replacement labor is reduced to 80% of original cost. Units Duration of work 1.5 hours Costs of parts to replace $30/unit 41 The maintenance of the system consists of: Maintenance Work Personel requirements Console cleaning and filter 1 technician replacement once a year 1 helper Condenser cleaning once a 1 technician year 1 helper Console extraction pump 1 technician replacement every 3 years 1 helper Monthly salary $1,550 $1,515 $1,550 $1,515 1 technician 1 helper 4 1 hour 41 % day $50/unit Maintenance is carried out by personnel from the Refrigeration Workshop assigned to the Department of Buildings and Land of the land. The total hours that a regular employee works in the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (They will need to calculate the cost associated with the time staff spend on maintenance tasks for this equipment.) The additional costs associated with the operation of the console system are as follows: Cost item Frequency Cost Cold water pipe insulation Cada 12 aos $12,000 replacement The costs associated with the electrical consumption of the console system are the following: The cost for electricity consumption of the complete console system is $ 175 per day, at a rate of 12 hours per day. Assume that the system will operate for 260 business days annually. 1. Perform a present value analysis to select the best alternative to. Consider that the replacements will be for identical units b. The residual value of the equipment corresponds to the cost of disposal of the unit c. Analyze a 30-year horizon d. Consider an interest rate of 6% The teachers' office area in the Jose Mendez building has problems associated with the air conditioning system. Currently the existing system is of centrifuge. The Buildings and Grounds Department is evaluating two alternatives to address the situation. The alternative consists of the installation of a system of individual units consisting of four condensers and 41 consoles. Units Total Cost Useful life The initial costs are as follows: Cost item Unitary Cost Condenser MDV 400 $9,000 Condenser MDV 450 $9,700 Consoles 12,000 BTU $700 Consoles 19,000 BTU $900 Materials*** Work for installation concept**** 2 2 31 10 6 years 6 years 6 years 6 years $35,000 $18,000 n/a n/a *** Includes materials for the insulation system. The cost of materials for the replacement of the consoles is obviated. **** Replacement labor is reduced to 80% of original cost. Units Duration of work 1.5 hours Costs of parts to replace $30/unit 41 The maintenance of the system consists of: Maintenance Work Personel requirements Console cleaning and filter 1 technician replacement once a year 1 helper Condenser cleaning once a 1 technician year 1 helper Console extraction pump 1 technician replacement every 3 years 1 helper Monthly salary $1,550 $1,515 $1,550 $1,515 1 technician 1 helper 4 1 hour 41 % day $50/unit Maintenance is carried out by personnel from the Refrigeration Workshop assigned to the Department of Buildings and Land of the land. The total hours that a regular employee works in the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (They will need to calculate the cost associated with the time staff spend on maintenance tasks for this equipment.) The additional costs associated with the operation of the console system are as follows: Cost item Frequency Cost Cold water pipe insulation Cada 12 aos $12,000 replacement The costs associated with the electrical consumption of the console system are the following: The cost for electricity consumption of the complete console system is $ 175 per day, at a rate of 12 hours per day. Assume that the system will operate for 260 business days annually. 1. Perform a present value analysis to select the best alternative to. Consider that the replacements will be for identical units b. The residual value of the equipment corresponds to the cost of disposal of the unit c. Analyze a 30-year horizon d. Consider an interest rate of 6%
