A new heat exchanger is required in conjunction with a rearrangement of existing facilities. Because of corrosion, the expected life of a carbon steel heat exchanger is 5 years. The installed cost is $12,200. An alternative to the heat exchanger is a unit fabricated of AISI type 316 stainless steel, with an installed cost of $36,400 and an estimated life of 15 years to be written of in 11 years. The minimum acceptable interest rate is 6%, the tax rate is 47% and the depreciation method is straight-line.
Determine which unit would be more economical based on annual costs.
In this case, assume that the carbon steel heat exchanger will require additional protection through $2,700 in yearly maintenance and use of inhibitors. Determine if the choice established in question 1 would be modified.
For the same conditions described in question 1 but uncertain that a service life of 5 years can be obtained with the carbon steel material, determine the service life at which the carbon steel heat exchanger is economically equivalent to the type 316 stainless steel unit.
Now, assume that the carbon steel heat exchanger can suffer leaks and evaluate how much product loss X can be tolerated after 2 of the 5 years of anticipated life of a carbon steel heat exchanger before the selection of type AISI 316 stainless steel could have been justified.
You should find all the information required to answer these problems by consulting the information module on Corrosion Economics, paying special attention to some of the examples given.
Take your calculator out of its case!
Study carefully the following two pages of useful formula and definitions (maybe you should print for easier access).
Try to solve the first problem given as an example. This one has a detailed solution that will show you more clearly what to do with all these equations.
Now that you have warmed up your calculator, try to see if your wits can tackle the second problem given as an example.
Wait, there is no need to try the other examples yet. We will come to these later.