Answer to Question #193520 in Economics of Enterprise for nur

Question

A heat exchanger has been designed and insulation is being considered for the unit. The insulation can be obtained in thickness of 0.025, 0.051, 0.076, or 0.102 m. The following data have been determined for the different insulation thicknesses:

Insulation thickness, m 0.025 0.051 0.076 0.102

kJ/s energy saved 88 102 108 111

Cost for installed insulation, $ 8 000 10 100 11 100 11 500

Annual fixed charges (% of installed cost) 10 10 10 10

What thickness of insulation should be used? The value of heat is $1.50/GJ. An annual return of 15 percent on the fixed-capital investment is required for any capital utilized in this type of investment. The income tax is 35 percent/year. The exchanger operates 300 days per year. 

Answer 1

$$Solution$$

The question above can be solved as shown in the table below :