ANNUAL WORTH ANALYSIS-THEN AND NOW Background and Information Mohamad, owner of an residential furnished apartment's in Dubai, performed an economic analysis 4 years ago when he decided to place an new eefficient central AC unit for each apartments instead of old split units windows type in each room. The estimates used and the annual worth analysis at MARR = 12% are summarized below. Two different AC brands were compared. Cost and installation, $ Annual maintenance cost, $ per year -800-300 Salvage value, $ 2,000 3,000 Electrical power savings, $ per year 25,000 35,000 Useful life, years 7 10 The spreadsheet in below sheet is the one Mohamad used to make the decision. York was the clear choice due to its substantially larger AW value, hence York AC units were installed. MARR 12% Years AW element Total AW Investment and salvage 0-$26,000 1 $0 2 $0 3 $0 4 $0 5 $0 6 $0 LG York -26,000 -36,000 7 $2,000 8 9 10 -$6,068 Annual maintenance $0 -$800 -$800 -$800 -$800 -$800 -$800 -$800 LG -$800 Repair savings $0 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $18,701.17 Investment and salvage -$36,000 $0 $O $O SO $O SO $O $O SO $3,000 -$7,025 York Annual Repair maintenance savings $0 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $0 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 $35,000 $35,000 $35,000 $28,499.52
ANNUAL WORTH ANALYSIS-THEN AND NOW Background and Information Mohamad, owner of an residential furnished apartment's in Dubai, performed an economic analysis 4 years ago when he decided to place an new eefficient central AC unit for each apartments instead of old split units windows type in each room. The estimates used and the annual worth analysis at MARR = 12% are summarized below. Two different AC brands were compared. Cost and installation, $ Annual maintenance cost, $ per year -800-300 Salvage value, $ 2,000 3,000 Electrical power savings, $ per year 25,000 35,000 Useful life, years 7 10 The spreadsheet in below sheet is the one Mohamad used to make the decision. York was the clear choice due to its substantially larger AW value, hence York AC units were installed. MARR 12% Years AW element Total AW Investment and salvage 0-$26,000 1 $0 2 $0 3 $0 4 $0 5 $0 6 $0 LG York -26,000 -36,000 7 $2,000 8 9 10 -$6,068 Annual maintenance $0 -$800 -$800 -$800 -$800 -$800 -$800 -$800 LG -$800 Repair savings $0 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $18,701.17 Investment and salvage -$36,000 $0 $O $O SO $O SO $O $O SO $3,000 -$7,025 York Annual Repair maintenance savings $0 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 $0 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 -$300 $35,000 $35,000 $35,000 $28,499.52
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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