Question

Focus on the difference between feasible alternatives ​(Principle 2LOADING...​)! Insulated concrete forms​ (ICF) can be used as a substitute for conventional wood framing in building construction. Heating and cooling bills will be about 6060​% less than in a similar​ wood-framed building in upstate New York. An ICF home will be approximately 1010​% more expensive to construct than a​ wood-framed home. For a typical 1 comma 8001,800 ftsquared2 home costing ​$130130 ftsquared2 to construct in upstate New York and costing ​$260260 per month to heat and​ cool, how many months does it take for a 1 comma 8001,800 ftsquared2 ICF home to pay back its extra construction​ cost?

Answer 1

The payback period for an ICF home compared to a wood-framed home can be calculated using the monthly savings in heating and cooling costs and the extra construction cost. In this case, it takes approximately 9 days for a 1,800 ft² ICF home to pay back its extra construction cost.

Step-by-step explanation:

The question is asking how many months it takes for a 1,800 ft² ICF home to pay back its extra construction cost compared to a wood-framed home. With an ICF home, the heating and cooling bills are 60% less than a wood-framed home.

However, the ICF home is 10% more expensive to construct.

To calculate the payback period, we need to compare the monthly savings in heating and cooling costs to the extra construction cost.

For a wood-framed home costing $130 per ft² to construct and $260 per month to heat and cool, the monthly savings for an ICF home would be (60/100) * $260 = $156.

The extra construction cost for the ICF home would be (10/100) * $130 = $13.

Therefore, the payback period would be $13 / $156 = 0.083 months, or approximately 9 days.

Answer 2

It will need 176 months (almost 15 years) to payback without considering the time value of money

Step-by-step explanation:

cost of a typical construction:

1,800 square feet x $130 per square fet = $234,000

the ICF is 10% more expensive:

$34,000 x 1.10 = $257,400

additional cost: $27,400

then the heat cost is $260 and it will be 60% less :

$260 - 60% =$260 x( 1 - 0.6) = $104

savigns $260 - $104 = $156

we now divide the additional cost over the saving per month.

$27,400 / 156 saving per month = 175,641025 = 176 months