Geothermal energy is a renewable, sustainable energy resource. Geothermal systems are available for a wide variety of applications. Mr. Naz Metz must replace his current system and is considering several options to make it more energy efficient. His current energy bill for heating and cooling is approximately $ 6,000 per year. Replacing his current system with a traditional heating and air conditioning split system (HVAC system) costs about $ 10,000. This replacement system would reduce his annual energy bill by approximately 15% due to increased efficiency of the condenser. As an alternative, Mr. Metz could install a residential geothermal system. This system would cost approximately $ 23,000 but promises to reduce his annual energy cost to 50% of its current level. The life expectancy of either system is 10 years with neither system having a salvage value at that time. Mr. Metz's personal MARR is 5% per year.

Geothermal energy is a renewable, sustainable energy resource. Geothermal systems are available for a wide variety of applications. Mr. Naz Metz must replace his current system and is considering several options to make it more energy efficient. His current energy bill for heating and cooling is approximately $ 6,000 per year. Replacing his current system with a traditional heating and air conditioning split system (HVAC system) costs about $ 10,000. This replacement system would reduce his annual energy bill by approximately 15% due to increased efficiency of the condenser. As an alternative, Mr. Metz could install a residential geothermal system. This system would cost approximately $ 23,000 but promises to reduce his annual energy cost to 50% of its current level. The life expectancy of either system is 10 years with neither system having a salvage value at that time. Mr. Metz's personal MARR is 5% per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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