A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $120,000, and it will save an estimated 300,000 kilowatt-hours (kWh) of electric power each year over a six-year period. A kilowatt-hour of electricity costs $0.10, and the company uses a MARR of 15% per year in its economic evaluations of refurbished systems. The market value of the system will be $8,000 at the end of six years, and additional annual operating and maintenance expenses are negligible. what is the benefit–cost ratio of the project if the general inflation rate is 4% per year and the market value is negligible? The market interest rate (im) is 18% per year, and the annual savings are expressed in year-zero dollars.
A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $120,000, and it will save an estimated 300,000 kilowatt-hours (kWh) of electric power each year over a six-year period. A kilowatt-hour of electricity costs $0.10, and the company uses a MARR of 15% per year in its economic evaluations of refurbished systems. The market value of the system will be $8,000 at the end of six years, and additional annual operating and maintenance expenses are negligible. what is the benefit–cost ratio of the project if the general inflation rate is 4% per year and the market value is negligible? The market interest rate (im) is 18% per year, and the annual savings are expressed in year-zero dollars.
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