Page 346 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

A change in air pollution control equipment is being considered. A baghouse filter is being
considered to replace an existing electrostatic precipitator. Consider the costs and savings for the
project in the following data.
Cost of new baghouse filter = $250,000
20. Projected utility savings = $70,000/yr
Time over which cost comparison should be made = 7 years
Internal hurdle rate = 7% p.a.

Should the baghouse filter be purchased and installed?

In considering investments in large capital projects, a company is deciding in which of the following
projects it will invest.

21.

The company can always invest its money in long-term bonds that currently yield 5.5% p.a. (after
tax). In which, if any, of the projects should the company invest if the capital ceiling for investment is
$250 million and a project life of 10 years is assumed? Would you argue to raise the investment
ceiling?

Because you live in a southern, warm-weather climate, your electricity bill is very large for about
eight months of the year due to the need for air conditioning. You have been approached by an agency
that would like to assist you in installing solar panels to provide electricity to run your air
conditioning. You were also considering adding additional insulation to your house. You also have
the option of doing nothing. Which of the following options would you choose based on the given
data?

22. a. Do nothing.

b. Install only the solar collector.

c. Install only the insulation.

d. Install both the solar collector and the insulation.

Data (all figures in $thousands)

Purchase and installation cost of solar collector
25

Purchase and installation of insulation
5

Current cooling bill
2.5/yr

Expected savings from insulation alone
0.9/yr