Question

Question 3 (10 points) Heidleman Industries is considering two types of materials for roofing its warehouses. EPDM is an elastomeric polymer synthesized from ethylene, propylene, and a small amount of diene monomer, compounded with carbon black processing oils and various cross-linking and stabilizing agents. The 75 mil thickness will cost $4.10 per square foot and will last for 25 years. A thin sheet aluminum (TSA) roof will cost $6.00 per square foot, but it will last for 50 years. Using an interest rate of 5% per year, calculate the annual worth per square foot for the polymer and aluminum roof. O Polymer Roof = $0.49 per square foot; Aluminum Roof = $0.53 per square foot Polymer Roof = $0.39 per square foot; Aluminum Roof = $0.23 per square foot O Polymer Roof = $0.19 per square foot; Aluminum Roof = $0.23 per square foot O Polymer Roof = $0.29 per square foot; Aluminum Roof = $0.33 per square foot

Answer 1

Annual worth = (present value * r) / (1 - (1 + r)^-n),

where r = rate of interest, and

n = number of years.

Present value is the cost itself, since it is incurred today.

Annual worth of Polymer roof

Annual worth = ($4.10 * 0.05) / (1 - (1 + 0.05)^-25)

Annual worth = $0.29

Annual worth of Aluminium roof

Annual worth = ($6 * 0.05) / (1 - (1 + 0.05)^-50)

Annual worth = $0.33