A small heat pump now costs $2,400 to purchase and install. It has a projected useful life of 18 years and will incur annual maintenance costs of S125 per year in real (year-zero) dollars over the useful life. These costs are projected to increase at 5% per year, which is the expected general inflation rate. The annual cost of electricity for the heat pump is S680 in year-zero dollars. Electricity prices are projected to increase at an annual rate of 10%. The firm’s MARR, which includes an allowance for general price inflation, is 18% per year (). No market value is expected from the heat pump at the end of the 18 years of service life. 2 Click the icon to view the interest and annuity table for discrete compounding when i= 18% per year. a. What is the PW of owning and operating the heat pump? The PW is $- (Round to the nearest dollar.) b. () What is the AW, expressed in actual dollars, of owning and operaling the heat pump? The AW is $ (Round to the nearest dollar.) () What is the AW in real dollars of owning and operating the heat pump? The AW is $ (Round to the nearest dollar.)

A small heat pump now costs $2,400 to purchase and install. It has a projected useful life of 18 years and will incur annual maintenance costs of S125 per year in real (year-zero) dollars over the useful life. These costs are projected to increase at 5% per year, which is the expected general inflation rate. The annual cost of electricity for the heat pump is S680 in year-zero dollars. Electricity prices are projected to increase at an annual rate of 10%. The firm’s MARR, which includes an allowance for general price inflation, is 18% per year (). No market value is expected from the heat pump at the end of the 18 years of service life. 2 Click the icon to view the interest and annuity table for discrete compounding when i= 18% per year. a. What is the PW of owning and operating the heat pump? The PW is $- (Round to the nearest dollar.) b. () What is the AW, expressed in actual dollars, of owning and operaling the heat pump? The AW is $ (Round to the nearest dollar.) () What is the AW in real dollars of owning and operating the heat pump? The AW is $ (Round to the nearest dollar.)

## Be the first to reply