Chapter 05, Problem 014 (Video Solution/GO Tutorial) Parker County Community Col

Question

Chapter 05, Problem 014 (Video Solution/GO Tutorial) Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use insulation that is either 1 inch thick or 2 inches thick on its steam pipes. The heat loss from the pipes without insulation is expected to cost $0.80 per year per foot of pipe. A 1 inch thick insulated covering will eliminate 89% o the oss and ill costs o. 5 pe foo A inch thick n sulated covering will eliminate 92% of the lost and will cost $0.85 per foot PCCC Physical plant Services estimates that there are 50 000 feet of steam pipe campus. The PCCC Accounting Officer uires a 10%/year return to justify capital expenditures. The insulation has a life expectancy of 10 years. nt hre re o What is the annual worth of each option? No insulation: $ 1-inch insulation: $ 2-inch insulation: Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20. Show a negative amount preceded by a minus sign. Which insulation (if any) should be purchased using a ranking annual worth analysis? Co

Explanation / Answer

1) No insulation costs $40,000 (50000*0.8)

2) Cost of 1 inch insulation is 17,500 ( 50,000*0.35) + 11% of the losses which is 4,400

3) Cost of 2 inch insulation is 42,500 ( 50,000 * 0.85) + 9% of the losses which is 3,600

Here option 1 seems to be the best as it is very cheap and resulting difference between 2 options is only 800

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