Question

The purchase price of a natural gas-fired commercial boiler (capacity X) WAS $485,000 eight years ago. Another boiler of the same basic design, except with capacity 1.60X, is currently being considered for purchase. If it is purchased, some optional features presently costing $$55,000 would be added for your application. If the cost index was 118 for this type of equipment when the capacity X boiler was purchased and is 145 now, and the applicable cost capacity factor is 0.7, What is your estimate of the purchase price of the new boiler?

Answer 1

0.7 1.60X Particulars Amount Working Purchase price of Capacity X boiler (8 years ago) $ 485,000 Purchase price of capacity X boiler in real dollars $ 411,017 ($485,000/118)*100 Given, Cost capacity factor Expected capacity for new boiler Capacity multiplier 1.12x 1.60 * 0.7 Purchase price of a new boiler (current price) $ 460,339 $411,017 * 1.12 Purchase price of a new boiler in real dollars $ 667,492 ($460,339 *145)/100 Add: Optional Features $ 55,000 Estimated Price of New boiler $ 722,492 $667,492 + $55,000 Note: Please Comment down for any further clarifications.