Coal-fired utility boiler is an important component of thermal power plant because increasing boiler efficiency leads to the reduction of the power plant heat rate. Boiler efficiency can be increased by decreasing the temperature of flue gas before it is exhausted to the environment. For a boiler that uses coal with high moisture content as fuel, two methods of recovering heat from flue gas are increasing surface area of air heater and installing flue gas dryer after air heater. The first method increases air temperature before combustion, and the second method reduces fuel moisture content before combustion. Both methods can result in the identical enhancement of boiler performance. However, previous investigations have not assessed the performance of the second method in comparison with the performance of the first method. In this paper, models of utility boiler and flue gas dryer are developed for comparative assessment of both methods. It is found that, in order to increase the boiler efficiency of a reference boiler to a specified value, the additional air heater surface area in the first method and the amount of moisture removed from fuel in the second method can be determined. Although both methods lead to the same boiler efficiency, the total installation costs of both methods may be different depending on the unit costs of flue gas dryer and air heater surface area. The installation of flue gas dryer has a cost advantage over the installation of additional air heater surface area if the ratio of the unit cost of flue gas dryer to that of air heater surface area is less than the upper limit.