The management recognizes that the present worth of the cogeneration plant is quite sensitive to the savings in electricity costs, the MARR, and the initial costs. Since there is some uncertainty about these estimates, the company wants to explore further the impact of changes in these parameters on the viability of the project. You are to carry out a break-even analysis for each of these parameters to find out what range of values results in a viable project (i.e., PW > 0) and to determine the “break-even” parameter values that make the present worth of the project zero
The management recognizes that the present worth of the cogeneration plant is quite sensitive to the savings in electricity costs, the MARR, and the initial costs. Since there is some uncertainty about these estimates, the company wants to explore further the impact of changes in these parameters on the viability of the project. You are to carry out a break-even analysis for each of these parameters to find out what range of values results in a viable project (i.e., PW > 0) and to determine the “break-even” parameter values that make the present worth of the project zero. How much of a drop in the cost of natural gas will result in the heat exchange units having a present worth of zero? Construct a break-even graph to illustrate this break-even cost
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