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:

Resource Base

The total available resources that an economy has access to, including natural resources, labor, and capital.

Trillion Dollar Economies

Countries whose Gross Domestic Product (GDP) exceeds one trillion dollars, reflecting a high level of economic output.

NDP

The total value of all goods and services produced within a country's borders in a specific time period, minus depreciation.

GDP

Gross Domestic Product, the total value of all goods and services produced over a specific time period within a country's borders, serving as a comprehensive measure of economic activity.