In the final design stage of a project, the question has arisen as to whether to use a water-cooled exchanger or an air-cooled exchanger in the overhead condenser loop of a distillation tower. The information available on the two pieces of equipment is provided as follows:

Both pieces of equipment have service lives of 12 years. For an internal rate of return of 8% p.a., which piece of equipment represents the better choice?

Transcribed Image Text:

Air-cooled Water-cooled Initial Investment $23,000 $12,000 Yearly Operating Cost $1200 $3300