It is desired to determine the most economical thickness of insulation for a large cold-storage room. Insulation is expected to cost $150 per 1,000 square feet of wall area per inch of thickness installed, and to require annual property taxes and insurance of 5% of the capital investment. It is expected to have $0 market value after a 20-year life. The following are estimates of the heat loss per 1,000 square feet of wall area for several thicknesses:
Insulation, in. Heat loss, Btu per hr
3 ........................................... 4,400
4 ........................................... 3,400
5 ........................................... 2,800
6 ........................................... 2,400
7 ........................................... 2,000
8 ........................................... 1,800
The cost of heat removal (loss) is estimated at $0.04 per 1,000 Btu. The MARR is 20% per year. Assuming continuous operation throughout the year, develop a spreadsheet to analyze the sensitivity of the optimal thickness to errors in estimating the cost of heat removal, i Use the AW technique.