In September 2009, a 3.45 megawatt cooling, heating, and power (CHP) system was placed in into operation

Question:

In September 2009, 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 facts related to the project are summarized as
• Installed cost: $2.5 million
• Annual energy cost savings: $786,000
• Annual O&M costs: $233,000
• Project service life: 15 years
• : $200,000
At an interest rate of 8%, what is the net savings per dollar invested?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...