This paper presents a case study that is a practical example for use in second semester thermodynamics, air conditioning or engineering economics courses. It integrates the students exposure to thermodynamics and engineering ecomomics. There is tremendous pressure to purchase the equipment with the lowest possible initial cost. However, if energy prices increase dramatically the choice of a low initial cost system may create unbearably high operating costs which could drive the owner of the

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... pment out of business. This is not good for future business. The goal of this paper is to equip students with a tool they can use to make optimum choices when selecting the level of efficiency for a piece of equipment. This tool uses life cycle cost analysis applied to thermodynamic systems (thermoeconomics) as the objective function in the optimization of a chiller. Thermo-economics will help the manufacturer determine what level of efficiency is best for the market. It will help the engineer determine the appropriate sizes for the components of a system. It will help the suppliers convince the building owner whether or not the additional cost for a high efficiency system is worth the additional investment. Thermo-economics is essential in the optimization of chillers or other energy consuming devices. It balances the opposing forces of initial cost and efficiency on equal footing: dollars. A user-friendly, easy to understand, return on investment analysis has been applied to a practical application. Sensitivity and breakeven analyses have been used to address the uncertainty that economic variables introduce into the problem. Students will want to add this tool to their professional portfolio so they are able to make wise choices that meet customer needs.