Question – A heat exchanger is being installed as part of a plant modernization program. It costs $80,000,
including installation, and is expected to reduce the overall plant fuel cost by $20,000 per year.
Estimates of the useful life of the heat exchanger range from an optimistic 12years to a pessimistic 4
years the most likely value is 5 years. Using the range of estimates to compute the mean life,
determine the estimated before-tax rate of return. Assume the heat exchanger has no salvage value
at the end of its useful life.
Oct 13 2013 06:37 AM
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