A gas-fired heating unit is expected to meet an annual demand for thermal energy of 500 million
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A gas-fired heating unit is expected to meet an annual demand for thermal energy of 500 million Btu, and the unit is 80% efficient. Assume that each 1,000 cubic feet of natural gas, if burned at 100% efficiency, can deliver one million Btu. Further suppose that natural gas is now selling for $7.50 per 1,000 cubic feet. What is the PW of fuel cost for this heating unit over a 12-year period if natural gas prices are expected to increase at an average rate of 10% per year? The firm’s MARR ( = im) is 18% per year.
MARRMinimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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Demand 500 million BTUyear Efficiency 80 N 12 years f 10 per ye...View the full answer
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Related Book For 
Engineering Economy
ISBN: 978-0133439274
16th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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