Determine which heat exchanger is cheaper

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Reference no: EM131061602

A heat exchanger has been designed for use in a chemical process. A standard type of heat exchanger with a negligible scrap value costs $4000 and will have a useful life of 6 years. Another proposed heat exchanger of equivalent design capacity costs $6800 but will have a useful life of 10 years and a scrap value of $800. Assuming an effective compound interest rate of 8 percent per year, determine which heat exchanger is cheaper by comparing the capitalized costs.

Reference no: EM131061602

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