Two types of air conditioning systems are under consideration for a building und
ID: 1212815 • Letter: T
Question
Two types of air conditioning systems are under consideration for a building under construction, financial information and operating characteristics of the two AC systems are summarized as follows: Assume that the AC will be operated 2,000 hours annually, the electricity cost is 10 cents per KWh (1HP = 0.746KW), the MARR is 10%. a) Determine the capital recovery cost, annual electricity cost for both models b) Determine the unit cost for each model (i.e. cost per operating hour), based on the unit cost, which model should be selected? c) Determine the breakeven annual operating hoursExplanation / Answer
Formula AC Model A AC Model B Price ($) P 16,000 10,000 Service Life (Years) SL 10 10 Salvage Value ($) SV 5,000 2,500 Operating & Maintenance Cost Per Year ($) OMC 350 300 Output (HP) OHP 150 150 Output (KW) OKW=OHP*0.746 112 112 Efficiency E 90% 85% Input (KW) IKW=OKW/E 124.33 131.65 Annual Operating Hours AOH 2,000 2,000 Electricity Cost Per KWh ($) ECPK 0.1 0.1 Annual Electricity Cost ($) AEC=IKW*AOH*ECPK 24,867 26,329 Minimum Acceptable Rate of Return (MARR) MARR 10% 10% Net Cost ($) NC=P-SV/(1+MARR)^SL 14,072.28 9,036.14 Capital Recovery Factor CRF=((1+MARR)^SL*MARR)/((1+MARR)^SL-1) 0.16 0.16 Capital Recovery Cost ($) CRC=NC*CRF 2,290 1,471 Cost Per Operating Hour or Unit Cost ($) UC=NC/AOH 7 5 Breakeven Annual Operating Hours BEAOH=OMC/UC 50 66 Selected AC Model (Based on Unit Cost) AC Model B
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