You Are Deciding Between Three Types of Water Heaters

question 9

Essay

You are deciding between three types of water heaters. The associated costs are shown below. The annual cost of operation for gas and oil heaters is estimated by 365 x 41045/EF x Fuel Cost per Btu, and the annual cost of operation for electric water heaters is estimated by 365 x 12.03/EF x Electricity Cost per kWh. The selected heater will be used for only one year and then sold at the market value. Which alternative should be selected? $$\begin{array} { | l | l | l | l | } \hline \text { Alternative } & \text { Electric } & \text { Gas } & \text { Oil } \\\hline \text { Price of water heater } & \$ 28,000 & \$ 23,000 & \$ 25,000 \\\hline \text { EF } & 2.0 & 0.57 & 0.75 \\\hline \text { Fuel cost } & \$ 0.1 / \mathrm { kWh } & \$ 0.00001 / \mathrm { Btu } & \$ 0.00001 / \mathrm { Btu } \\\hline \text { Annual maintenance costs } & \$ 3000 & \$ 2200 & \$ 2500 \\\hline \text { Market value } & \$ 25,200 & \$ 20,700 & \$ 22,500 \\\hline\end{array}$$

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Definitions:

In-Group

A social group to which a person psychologically identifies as being a member.

Individuals

Persons considered separately from other members of a group or the collective groups to which they belong.

Social Identity Theory

A psychological theory proposing that a person's sense of who they are is based on their group membership(s).

Self-Esteem

An individual’s overall subjective emotional evaluation of their own worth or personal value.