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Category > Business & Finance Posted 30 Apr 2017 My Price 11.00

Annual Equivalent Worth: A Single-Project Evaluation

Annual Equivalent Worth: A Single-Project Evaluation

A utility company is considering adding a second feedwater heater to its existing system unit to increase the efficiency of the system and thereby reduce fuel costs. The 150-MW unit will cost $1,650,000 and has a service life of 25 years. The expected salvage value of the unit is considered negligible. With the second unit installed, the efficiency of the system will improve from 55% to 56%. The fuel cost to run the feedwater is estimated at $0.05 kWh. The system unit will have a load factor of 85%, meaning that the system will run 85% of the year.

(a) Determine the equivalent annual worth of adding the second unit with an interest rate of 12%. 
(b) If the fuel cost increases at the annual rate of 4% after first year, what is the equivalent annual worth of having the second feedwater unit ati = 12%?

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Status NEW Posted 30 Apr 2017 01:04 PM My Price 11.00

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