Question: It is desired to determine the most economical thickness of insulation for a large coldstorage room. Insulation is expected to cost $150 per 1,000 square feet of wall area per inch of thickness installed, and to require annual property taxes and insurance of 5% of the capital investment. It is expected to have $0 market value after a 20-year life. The following are estimates of the heat loss per 1,000 square feet of wall area for several thicknesses:
The cost of heat removal (loss) is estimated at $0.04 per 1,000 Btu. The MARR is 20% per year. Assuming continuous operation throughout the year, develop a spreadsheet to analyze the sensitivity of the optimal thickness to errorsin estimating the cost of heat removal. Use the AW technique.