A retrofitted space-heating system is being considered for a small office building. The system can be purchased and inst

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A Retrofitted Space Heating System Is Being Considered For A Small Office Building The System Can Be Purchased And Inst 1 (20.43 KiB) Viewed 19 times

A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $150,000, and it will save an estimated 240,000 kilowatt-hours (kWh) of electric power each year over an eight-year period. A kilowatt-hour of electricity costs $0.15, and the company uses a MARR of 10% per year in its economic evaluations of refurbished systems. The market value of the system will be $18,000 at the end of eight years, and additional annual operating and maintenance expenses are negligible. Use the benefit-cost method to make a recommendation. 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 20% per year, and the annual savings are expressed in year-zero dollars.