The net savings per dollar invested is $ In September 2015, a 3.45 megawatt cool

Question

The net savings per dollar invested is $

In September 2015, a 3.45 megawatt cooling, heating, and power (CHP) system was placed in into operation for Southeast Regional Hospital with 360 beds. The CHP system was part of a new 20,000 sq. ft. central utility plant that provided the 800,000 sq. ft. health-care facility with cooling, heating and power. By centralizing all of the utilities in one location, the hospital accrued significant energy savings, as well as improved maintenance efficiency. The financial factsrelated to the project are summarized as Installed cost: $2.4 million Annual energy cost savings: $776,000 Annual O&M; costs: $236,000 Project service life: 17 years Salvage value: $200,000 At an interest rate of 6%, what is the net savings per dollar invested?

Explanation / Answer

Solution:

B = $776,000*(P / A,6%,17)

B = $776,000*10.4773 = $8,130,384.80

C=$236,000*(P/ A,6%,17)

C' = $236,000*10.4773 = $2,472,642.8

I =$2,400,000$200,000*(P/F,6%,17) = $2,325,720

Net savings per dollar invested = ($8,130,384.80-$2,472,642.8) /$2,325,720 =2.43

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