Question 1

A premium efficiency pump in an industrial facility will cost $40,000 installed, and will consume $9,500 per year of energy and require $1,500 per year worth of maintenance for a lifetime of 12 years. A standard-efficiency pump will cost $27,000 and will consume $13,000 per year of energy and will require $800 per year worth of maintenance for the same lifetime. If your company uses a MARR of 10%, would you invest in the energy-efficient pump? Justify your answer.

Question 2

A property company who will also operate the building is deciding whether to build a standard efficiency office building or a high efficiency office building. The office building is 8,000 m2 and its energy is supplied 100% by electricity. The standard efficiency office tower will consume approximately 140 kWh / m2 /y. The high efficiency office tower will consume approximately 100 kWh / m2 /y. The incremental cost (i.e. the cost between the standard efficiency and high efficiency office tower) is $40 per m2 and the building systems are expected to last 25 years.Assume electricity price is at $0.10 per kWh.

• a. What is the estimated annual energy cost savings per year for the high efficiency building compared to the standard efficiency building?
• b. Does it make sense for the property company to invest in the high efficiency office building? Defend your answer.