In this paper, it is shown that the Arithmetic Mean Temperature Difference, which is the difference between the average temperatures of hot and cold fluids, can be used instead of the Log Mean Temperature Difference (LMTD) in heat exchanger analysis. For a given value of AMTD, there exists an optimum heat transfer rate, Qopt, given by the product of UA and AMTD such that the rate of heat transfer in the heat exchanger is always less than this optimum value. The optimum heat transfer rate takes place in a balanced counter flow heat exchanger and by using this optimum rate of heat transfer, the concept of heat exchanger efficiency is introduced as the ratio of the actual to optimum heat transfer rate. A general algebraic expression as well as a chart is presented for the determination of the efficiency and therefore the rate of heat transfer for parallel flow, counter flow, single stream, as well as shell and tube heat exchangers with any number of shells and even number of tube passes per shell. In addition to being more intuitive, the use of AMTD and the heat exchanger efficiency allow the direct comparison of the different types of heat exchangers.

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