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Question
Many decisions are made on the basis of the payback period: the time it will take through savings to equal the capital cost of an investment. Acceptable payback times depend upon the business or philosophy one has. (For some industries, a payback period is as small as two years.) Suppose you wish to install the extra insulation in Exercise 14.41. If energy cost \$1.00 per million joules and the insulation was \$4.00 per square meter, then calculate the simple payback time. Take the average $\Delta T$ for the 120 day heating season to be $15.0\textrm{C}^\circ$.

The payback period is 0.26 years, not including installation costs.

Solution Video