Question

Economical solar energy and energy from fusion have been identified as two of engineering's grand challenges. While work continues on these grand challenges, conservation of energy from non-renewable sources is vital. On a practical level, installing low thermal emissivity windows (low-e windows) on buildings can contribute to energy conservation. Installing low-e windows on a small office building is estimated to cost $9,000. The windows are expected to last 8 years and have no salvage value at that time. The energy savings from the windows are expected to be $2,775 in the 1st year. After the 1st year, the savings are expected to increase by $125 each year due to escalating fossil fuel costs. MARR is 12% per year and annual worth is the preferred measure of economic worth.
Are the low-e windows an economically attractive investment?
The annual worth of installing the low-e windows is $_________
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +1.
The low-e window investment _______attractive.

Answer 1

Answer:

Economical Solar and Fusion Energy

The annual worth of installing the low-e windows is $_1,327________

Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +1.

The low-e window investment ___is____attractive.

Explanation:

a) Data and Calculations:

Present values:

Year    Annual        PV Factor           PV of

          Savings                                 Savings

Year 1   $2,775          0.893         $2,478.075

Year 2 $2,900          0.797             2,311.300

Year 3 $3,025          0.712             2,153.800

Year 4  $3,150          0.636           2,003.400

Year 5 $3,275          0.567            1,856.925

Year 6 $3,400          0.507            1,723.800

Year 7 $3,525          0.452            1,593.300

Year 8 $3,650          0.404            1,474.600

Total  $25,700         4.968       $15,595

Annual Worth of the Present Value of savings = $15,595/4.968 = $3,139

Annual worth of the Present Value of investment costs = $9,000/4.968

= $1,812

Annual worth = $1,327 ($3,139 - $1,812)