25 Jul DETERMINE THE INTEREST RATE IN WHICH BOTH ALTERNATIVES ARE EQUALLY ATTRACTIVE.
vA building has problems associated with the air conditioner. The actual system is centrifuge (chille Show more A building has problems associated with the air conditioner. The actual system is centrifuge (chiller). Two alternatives are being evaluated to attend the situation. The first alternative consists on replacing the centrifuge (chiller) of 50 tons the handler system and the insulation system. The initial costs are: Unit Cost Lifespan Centrifuge (chiller) 50 tons $30000 12 years Handlers $45000 30 years Materials $2000 n/a Insulation System $20000 n/a Installation work* $1200 n/a *It reduces to 60% in case of equipment replacement. The maintenance of the centrifuge (chiller) consist on: Maintenance labor Personnel required Labor duration Monthly salary Cost Cleaning every 6 months 1 tecnician 1 assistant 1 day $1550 $1515 Anual maintenance of water pump 1 tecnician 1 assistant 1/2 day $1550 $1515 Anual visit of manufacturer $1000 Fan replacements every 3 years 1 tecnician 1 assistant 1 hour $1550 $1515 $150 Total hours of an employee are 1920 hours per year at a rate of 7.5 hours daily. Additional costs associated with the operation of the centrifuge (chiller) Part of cost Frequency Cost Replacement of cold water pipe insulation Every 5 years $20000 Replacement of acoustic boards** anual $9500 ** This cost is necessary because there is no maintenance program for the insulation system The costs associated with the power consumption of the centrifuge (chiller) and handler are: The cost of daily power consumption of a 50 ton centrifuge (chiller) is $123 daily The cost of daily power consumption of the handler is $22 daily The centrifuge (chiller) system operates continuously. The second alternative consists on the installation of a system of individual units consisting of 4 condensers and 41 consoles. The initial costs are: Part of cost Cost per unit Units Total cost lifespan MDV 400 condenser $8450 2 7 years MDV 450 condenser $9400 2 7 years 12000 BTU consoles $650 31 7 years 19000 BTU consoles $865 10 7 years Materials*** $32000 n/a Installation work**** $16000 n/a *** Includes materials for the insulation system. **** It reduces to 20% in case of equipment replacement. The maintenance of the system consist of: Maintenance labor Personnel required Units Labor duration Monthly salary Cost of replacement parts Console cleaning and filter replacements every year (annually) 1 tecnician 1 assistant 41 1.5 hour $1550 $1515 $30/unit Condenser cleaning every year (annually) 1 tecnician 1 assistant 4 1 hour $1550 $1515 Replacement of extraction pump from the consoles every 3 years 1 tecnician 1 assistant 41 day $50/unit Total hours of an employee are 1920 hours per year at a rate of 7.5 hours daily. The additional costs associated with the operation of the console system are: Part of cost Frequency Cost Replacement of insulation pipe refrigerant Every 10 years $10000 Replacement of acoustic boards ***** Every 4 years $9500 ***** This cost is necessary because there is no maintenance program for the insulation system The costs associated with the power consumption of console system are: The cost of power consumption of the entire console system is $151.30 daily at a rate of 12 hours daily. Assume that the system will operate during 260 working days annually. 4. Consider that the equipment will be acquired by a manufacturing industry a. Determine the interest rate in which both alternatives are equally attractive. b. Assume that the equipment will be used to provide air conditioning to the areas of production that generates an income of $500000 annually. Depreciate the console system in operational state using the modified accelerated recovery system capital and determine the cash flow after tax Using EXCEL is recommended to facilitate the computations. Show less
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