Question

Consider a homeowner who is replacing his 25-year old natural gas furnace that has an efficiency of 55 %. The homeowner is considering a conventional furnace that has an efficiency of 81 % and costs $1600 and a high efficiency furnace that has an efficiency of 95 % and costs $2700. The homeowner would like to buy the high-efficiency furnace if the savings from the natural gas pay for the additional cost in less than 8 years. If the homeowner presently pays $1200 a year for heating, determine if he should buy the conventional or high-efficiency model. per year. For the heater with 81% efficiency, the annual cost of heating is $ For the heater with 95% efficiency, the annual cost of heating is $ The homeowner should purchase the conventional model per year. Hints References eBook & Resources Hint #1

Answer 1

Answer: The cost of useful heat : $ 1200 X 55%. - $660 (0) so, the annual cost of heating if it has an efficiency of 81% Cost of useful heat Efficiency $660 81% $815 per year (b). The annual cost of healing if the heater has an efficiency of 95% . $660 957 $695 per year

(c). Annual Cost Soking for efficient heales $ 815 – $695 $120 per year. Also, Extre Initial Cost incurred $2700 - $1600 $110. Soi 'Payback period Extra Initial Cost abrinual cost saning $1100 $120 a g. 16 years. Since ; Payback period is more than 8 years, so The homeowner should purchase the conventional model.

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