Capitalized Cost Criterion Assignment
February 19th, 2020
A heat-exchanger is to be used for heating a process stream. A standard type of heatexchanger with a $1000 salvage value costs $20,000 and will have a useful life of 6 years. Another type of heat-exchanger with equivalent design capacity is priced at $35,000 but with a useful life of 8 years and a salvage value of $4,000. Assume an effective compound interest rate of 8% per year and that the replacement cost of each heat-exchanger is the same as the original value. Determine which heat-exchanger would be preferred using the capitalized cost criterion. Get Finance homework help today