Project management and cost analysis.

Question

A heat exchanger has been designed and insulation is being considered for the unit. The insulation can be obtained in thickness of 25mm, 50mm, 75mm and 100nnm. The following data have been determined for the different insulation thickness:

25 mm 50 mm 75 mm 100 mm

Kcal/hr Saved           75000 87500 93700 95000

Cost for insulation (Rs)      65000 70000 90000 93500

Annual fixed charges (%)  10 10      10     10

The value of heat is Rs. 60 per million K.Cal. An annual return of 15% on fixed capital investment is required for any capital put into this type of investment. The exchanger operates 300 days per year. Which thickness of insulation should be used?    PLEASE SOLVE THIOS QUESTION.

Answer 1

Answer:  50 MM

Insulation Thickness   25 mm          50 mm          75 mm          100 mm

Kcal/hr Saved            75000          87500           93700          95000

$ for insulation (Rs)    65000           70000           90000          93500

Days of Operation      300

Total Kcal/Yr Saved 540,000,000   630,000,000   674,640,000         684,000,000

Kcal Saved x 300 Days x 24 hrs

Equiv Rs Saved /Yr $32,400.00    $37,800.00    $40,478.40         $41,040.00

(Total Kcal/Yr Saved / 1,000,000) x 60

Years to Breakeven 2.01              1.85              2.22            2.28

ROI                        50%             54%             45%            44%

1-(Gain of Investment – Cost of Investment) /Cost of Investment