Overall power needs and the total cost of the chiller to a significant level can be influenced by the choice of evaporator and condenser, though, the compressor is the major power consumer and the most expensive component of the chiller. Use of larger condenser and evaporator means a high initial cost of these heat exchangers, however, it may not necessarily increase the overall cost in $/RT for the chiller as the chiller with the same compressor and motor will yield more cooling due to increase in the evaporation temperature and decrease in the condensation temperature. Likewise, the larger heat exchangers are helpful to minimize pressure drop resulting in significant reduction in power requirements of condenser and chilled water pumps. Thus, the power requirement and thereby the initial or installed cost of power for such a system will undoubtedly will be less. The paper identifies important factors to be considered for selection of a chiller. Further, it specifies a methodology for cost-effective and energy efficient selection of heat exchangers for a give application. The results are finally applied for a computer selection of 450 RT water-cooled chiller for different sizes of condensers and evaporators for the design conditions of Kuwait.