Question

Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather conditions. One alternative must be selected. Estimated savings in heat loss and installation cost are given below. Which thickness would you recommend for a MARRequals12​% per year and negligible market​ (salvage) values? The study period is 4 years. Use the imputed market value technique to estimate the market value of the 5 cm alternative after four years.

Answer 1

= - $3068 per year

Step-by-step explanation:

The AW of 5 cm insulation is

AW 5 cm (15%) = -40000(A/P, 15%, 6) +7500

=-40000(0.2642) +7500

= - $3068 per year