A process heat recovery study identifies five potential modifications, none of which are

mutually exclusive, with the costs and energy savings given below.

Project Capital Cost $($MM$$)$ Fuel Savings $($MMBtu$/$hr$)$

A $1\mathrm{.}515$

B $0\mathrm{.}69$

C $1\mathrm{.}816$

D $2\mathrm{.}217$

E $0\mathrm{.}38$

If fuel costs $$6/$MMBtu and the plant operates for $350$ days$/$year$,$ which projects have a

simple payback period less than one year?

What is the maximum $10-$year NPV that can be achieved with a $15\%$ interest rate and a

$35\%$ tax rate? Assume all the projects can be built immediately, and use MACRS depreciation

with a five$-$year recovery term. What combination of projects is selected to meet the maxi$-$

mum NPV$?$