A furnace is being considered for the incineration of medical wastes at a local hospital. The initial
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Question:
A furnace is being considered for the incineration of medical wastes at a local hospital. The initial investment is $250,000 and annual savings are expected to be $175,000 over the six-year life of the furnace. Annual expenses will be $95,000 at the end of year one and will increase by $5,000 each year thereafter. The resale value of the furnace after six years is $20,000.
a) Construct a Cashflow diagram for the investment. (5 Points)
b) Determine the discounted payback period of the furnace if the interest rate is 8% per year. (12 Points)
c) Determine the Rate of Return of the investment using interpolation. (13 Points)
Related Book For
Fundamentals of Thermodynamics
ISBN: 978-0471152323
6th edition
Authors: Richard E. Sonntag, Claus Borgnakke, Gordon J. Van Wylen
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