The B&E Cooling Technology Company, a maker of automobile air conditioners, faces an impending deadline to phase out the traditional chilling technique, which ich uses chlorofluorocarbon (CFCS), a family of refrigerant chemicals believed to attack the earth's protective ozone layer. B&E has been pursuing other means of cooling and refrigeration. As a near-term solution, its engineers recommend a cooling technology known as absorption chiller, which uses plain water as a refrigerant and semiconductors that cool down when charged with electricity. The company plans to retrofit the plant now to adopt the absorption chiller and continuing to be a market leader in cooling technology. B&E is considering three options: The financial data for the three options are as follows: Item Initial investment System life Salvage value Annual revenue Annual operations and maintenance costs Option 1 $6 Million 8 years $1 Million $9 Million $6 Million If B&E's MARR is 15% and using equivalent annual worth method, compute the ffg (Round off answer to whole number): Option 2 $8 Million 8 years $2 Million $10.5 Million $8 Million Option 3 $5 Million 8 years $2 Million $11 Million $7.5 Million

The B&E Cooling Technology Company, a maker of automobile air conditioners, faces an impending deadline to phase out the traditional chilling technique, which ich uses chlorofluorocarbon (CFCS), a family of refrigerant chemicals believed to attack the earth's protective ozone layer. B&E has been pursuing other means of cooling and refrigeration. As a near-term solution, its engineers recommend a cooling technology known as absorption chiller, which uses plain water as a refrigerant and semiconductors that cool down when charged with electricity. The company plans to retrofit the plant now to adopt the absorption chiller and continuing to be a market leader in cooling technology. B&E is considering three options: The financial data for the three options are as follows: Item Initial investment System life Salvage value Annual revenue Annual operations and maintenance costs Option 1 $6 Million 8 years $1 Million $9 Million $6 Million If B&E's MARR is 15% and using equivalent annual worth method, compute the ffg (Round off answer to whole number): Option 2 $8 Million 8 years $2 Million $10.5 Million $8 Million Option 3 $5 Million 8 years $2 Million $11 Million $7.5 Million

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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