Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather conditions. One alternative must be selected. Estimated savings in heat loss and installation cost are given in Table 1. Which thickness would you recommend

 

Two insulation thickness alternatives have been proposed for a process steam line subject to severe weather conditions. One alternative must be selected. Estimated savings in heat loss and installation cost are given in Table 1. Which thickness would you recommend for a MARR = 15% per year and negligible market (salvage) values? The study period is 12 years. show the calculation.

Table 1

Thickness	Install cost	Annual savings	Useful life
2cm	$20,000	$5,000	4 years
5cm	$40,000	$7,500	6 years

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