A company wants to renew its old natural gas fired boiler. According to the received price...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A company wants to renew its old natural gas fired boiler. According to the received price offer, the new boiler is 400,000 TL in cash. The natural gas consumption of this boiler is 15 m³/hour and the price of natural gas is 1.1 TL/m3. The annual real price escalation of natural gas is determined as 1%. The annual cost of the boiler operation and maintenance costs is 25,000 TL and the annual escalation value is 17%. By purchasing a new boiler, some of the costs of the old boiler will be saved. The old boiler has costs of 250,000 TL increasing by 15% annually. The new boiler will run for 6,000 hours a year. The annual discount rate is 24% and the annual inflation rate is 17%. Determine whether it is economically feasible to purchase the new boiler by using the annual worth method, taking into account the 10-year costs and savings. Use real rates for relevant parameters in calculations. (40 P) A company wants to renew its old natural gas fired boiler. According to the received price offer, the new boiler is 400,000 TL in cash. The natural gas consumption of this boiler is 15 m³/hour and the price of natural gas is 1.1 TL/m3. The annual real price escalation of natural gas is determined as 1%. The annual cost of the boiler operation and maintenance costs is 25,000 TL and the annual escalation value is 17%. By purchasing a new boiler, some of the costs of the old boiler will be saved. The old boiler has costs of 250,000 TL increasing by 15% annually. The new boiler will run for 6,000 hours a year. The annual discount rate is 24% and the annual inflation rate is 17%. Determine whether it is economically feasible to purchase the new boiler by using the annual worth method, taking into account the 10-year costs and savings. Use real rates for relevant parameters in calculations. (40 P)
Expert Answer:
Answer rating: 100% (QA)
To determine the economic feasibility of purchasing the new boiler we will calculate the annual worth of costs and savings over a 10year period using the annual worth method Lets break down the calcul... View the full answer
Related Book For
Managerial Decision Modeling With Spreadsheets
ISBN: 9780136115830
3rd Edition
Authors: Nagraj Balakrishnan, Barry Render, Jr. Ralph M. Stair
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Mixing together solutions of acetic acid and sodium hydroxide can make a buffered solution. Explain. How does the amount of each solution added change the effectiveness of the buffer?
-
The vegetable buyer for a group of grocery stores has decided to sell packages of sprouted grain in the vegetable section of the stores. The product is perishable and any remaining unsold after one...
-
Southwest Blue Airways provides air transportation services between Seattle and San Diego. A single Seattle to San Diego round-trip flight has the following operating statistics: Fuel...
-
What are information quality and environmental quality? Are they related? Why is low-quality information said to drive out high-quality information?
-
This is a continuation of Problem 3B. You must complete Problem 3B before attempting this problem. Additional transactions for July follow: July 16 Received payment from Paul Kane for the July 6...
-
Calculate the Holding Period Return for an investment purchased at $155.20 and sold at $184.39. Assume no additional dividends during the holding period.
-
On December 1, Year 1, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and...
-
How can a database system be architected to support both structured and unstructured data types, and what are the implications for query design, storage efficiency, and data retrieval in a hybrid...
-
Jumpstart is a nonproft social venture whose mission is to provide low-income preschoolers (4-yearolds) with educational experiences designed to develop their reading, learning, and social skills...
-
Silicon is doped with the following elements. In each case, is the resultant extrinsic semiconductor \(n\)-type or p-type: indium, gallium, phosphorus, boron, arsenic, aluminum, antimony?
-
Conduction in a semiconductor can be greatly enhanced by the addition of very small quantities of dopant atoms, even in the parts-per-million range. Explain how the addition of such a tiny percentage...
-
A capacitor for which \(\mathrm{C}=10 \mathrm{mF}\) is connected across an AC source. The source emf is given by \(\mathscr{E}=\mathscr{E}_{\max } \sin \omega t\), with \(\varepsilon_{\max }=5.0...
-
An inductor for which \(L=10 \mathrm{mH}\) is connected to an \(\mathrm{AC}\) source. The source emf is given by \(\mathscr{E}=\mathscr{E}_{\max } \sin \omega t\), with \(\mathscr{E}_{\max }=5.0...
-
Required Using the ratios provided, advise of the profitability, liquidity, efficiency, capital structure and market performance of McDonalds Furniture between 2021 and 2022. Your answer must include...
-
As water moves through the hydrologic cycle, water quality changes are common because of natural phenomena or anthropogenic pollution. Using Figure 11.1, describe how water-quality changes occur...
-
Daily sales volume for Nilgiris Convenience Store is shown in the following table: Develop two-day, three-day, and four-day moving averages to forecast the sales for each day. What is the forecast...
-
Steve (see Problem 8-14) has gathered some additional information. The probabilities of good, average, and poor markets are 0.25, 0.45, and 0.3, respectively. (a) Using EMVs, what option should Steve...
-
In Problem 5-37, all roads leading into and out of nodes 4 and 9 (see Figure 5.26) have been closed because of bridge repairs. What impact (if any) will this have on the shortest route between Port...
-
Why is communications management so important during project execution? What is the difference between formal and informal communications? Why are nonverbal communications so important?
-
What is involved in managing quality, and how does it affect project execution? What are tools and techniques used in performing quality assurance? How did Kristins team use one of these tools to...
-
Find an example of a large project that took more than a year to complete. Describe some of the planning work completed for the project as part of project integration and scope management. Summarize...
Study smarter with the SolutionInn App