Based on the information provided in Example 10.10 for an acceptable internal interest rate of 15% and

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Based on the information provided in Example 10.10 for an acceptable internal interest rate of 15% and time n = 5 y, determine the most attractive alternative, using the INPV criterion to compare options.


Example 10.10

A circulating heating loop for an endothermic reactor has been in operation for several years. Due to an oversight in the design phase, a certain portion of the heating loop piping was left uninsulated. The consequence is a significant energy loss. Two types of insulation can be used to reduce the heat loss. They are both available in two thicknesses. The estimated cost of the insulation and the estimated yearly savings in energy costs are given in Table E10.10. (The ranking has been added to the alternatives and is based on increasing project cost.)Ranking (Option #) 1 2 3 4 5  Table E10.10 Rankings of Alternative Insulations for Example 10.10 Alternative

Assume an acceptable internal rate of return for a nondiscounted profitability analysis to be 15% (0.15).

1. For the four types of insulation determine the rate of return on incremental investment (ROROII) and the incremental payback period (IPBP).

2. Determine the value of the incremental payback period equivalent to the 15% internal rate of return.

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Analysis Synthesis And Design Of Chemical Processes

ISBN: 9780134177403

5th Edition

Authors: Richard Turton, Joseph Shaeiwitz, Debangsu Bhattacharyya, Wallace Whiting

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