A boiler is being considered for a new process plant
Course:- Microeconomics
Reference No.:- EM13700196

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A boiler is being considered for a new process plant. The boiler can be fired either by natural gas, fuel oil, or coal. A decision must be made on which fuel to use. An analysis of the costs shows that the installed cost, with all controls, would be least for natural gas at $60,000; for fuel oil it would be $110,000; for coal it would be $360,000. If natural gas is used rather than fuel oil, the annual fuel cost will increase by $15,000. If coal is used rather than fuel oil, the annual cost will be $30,000 per year less. Assuming a MARR of 8%, a 20-year analysis period, and no salvage value, which is the most economical installation?

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