I’ve been looking to get ducted AC installed at my residence and have had a few quotes come in. As the AC units, zoning and controls came with a similar set of features, I investigate the decision from an objective financial standpoint by ranking the offerings by comparing both the capital and operating costs. The rank* is calculated by:

where

*capital_cost* is the total installation price in dollars

*number_of_years* is the number of years the AC will be in operation

*cost_per_unit_capacity* is the electricity price (e.g. cents per kWh)

*max_cooling_usage* is the number of hours per year the AC will run on max cooling capacity

*min_cooling_usage* is the number of hours per year the AC will run on min cooling capacity

*max_heating_usage* is the number of hours per year the AC will run on max heating capacity

*min_heating_usage* is the number of hours per year the AC will run on min heating capacity

*cooling_input_power* is the rated input power in kW for cooling

*heating_input_power* is the rated input power in kW for heating

*min_cooling_capacity* is the minimum cooling capacity in kW

*min_cooling_capacity* is the minimum heating capacity in kW

*min_eer* is the min EER (Energy Efficiency Ratio) out of all the ACs being compared

*current_eer* is the EER of this particular AC

*min_cop* is the min COP (Coefficient Of Performance) out of all the ACs being compared

*current_cop* is the COP of this particular AC

I use the term rank rather than Total Cost of Ownership since I don’t bother discounting future cashflows nor take into account maintenance (since I couldn’t get a hold of spare parts price lists).

Most spec sheets also don’t provide an input power at min capacity, so the calculation tries to make an estimate based on the EER/COP, input power and min capacity. For those that do provide an input power at min capacity, the 2nd and 4th components within the parentheses can be made similar to the 1st and 4th components.

Ironically, I ended up choosing the AC ranked second, because of a qualitative aspect – the brand value that would have a bearing on price and availability of spare parts required outside the warranty period.

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