A special-purpose 30-horsepower electric motor has an efficiency of 91%. Its purchase and installation price is $2,200. A second 30-horsepower high-efficiency motor can be purchased for $3,100, and its efficiency is 92%. Either motor will be operated 3,500 hours per year at full load, and electricity costs $0.09 per kilowatt-hour (kWh). MARR = 12% per year, and neither motor will have a market value at the end of the eight-year study period. a. Which motor should be chosen? b. For an incremental investment of $900 in the more efficient motor, what is the PW of the energy savings over the eight-year period? Recall that 1 hp = 0.746 kW. Click the icon to view the interest and annuity table for discrete compounding when i=12% per year. a. The PW of the motor with the efficiency of 91% is $ (Round to the nearest dollar.)

A special-purpose 30-horsepower electric motor has an efficiency of 91%. Its purchase and installation price is $2,200. A second 30-horsepower high-efficiency motor can be purchased for $3,100, and its efficiency is 92%. Either motor will be operated 3,500 hours per year at full load, and electricity costs $0.09 per kilowatt-hour (kWh). MARR = 12% per year, and neither motor will have a market value at the end of the eight-year study period. a. Which motor should be chosen? b. For an incremental investment of $900 in the more efficient motor, what is the PW of the energy savings over the eight-year period? Recall that 1 hp = 0.746 kW. Click the icon to view the interest and annuity table for discrete compounding when i=12% per year. a. The PW of the motor with the efficiency of 91% is $ (Round to the nearest dollar.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

At 20% cpd. monthly., find the capitalized cost of a bridge whose cost is P673777 with a life of 22 years, if the bridge must be rehabilitated at a cost of P218341 at the end of each 22 years.
You purchased a building five years ago for $100,000. Its annual maintenance expense has been $5,000 per year. At the end of five years, you sold the building for $80,000. During the period of ownership, you rented out the building for $10,000 per year at the beginning of each year. Evaluate this investment when MARR is 8% per year. The payback period is, a. 4 years b. 5 years c. 2 years d. 3 years
A piece of equipment has an initial cost of $150,000. The market value at the end of each of the next five years is expected to be $65,000, $45,000, $25,000, $5,000 and $0 respectively. The operating and maintenance costs in year 1 are expected to be $10,000 and to increase by $4,000 per year starting in year 2. What is the minimum cost life for this equipment? Assume MARR = 10 %.
An integrated, combined cycle power plant produces 285MW of electricity by gasifying coal. The capital investment for the plant is $570 million, spread evenly over two years. The operating life of the plant is expected to be 20 years. Additionally, the plant will operate at full capacity 75% of the time (downtime is 25% of any given year). a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? Tabulate the net cash flow and the cumulative PW. b. What is the IRR for the plant? Is it profitable?
Two options are available for painting your house: (1) Oil-based painting, which costs $5,000, and (2) water-based painting, which costs $3,000. The estimated lives are 10 years and 5 years, respectively. For either option, no salvage value will remain at the end of the respective service lives. Assume that you will keep and maintain the house for 10 years. If your personal interest rate is 10% per year, which of the following statements is correct?(a) On an annual basis, Option 1 will cost about $850(b) On an annual basis, Option 2 is about $22 less than Option 1(c) On an annual basis, both options cost about the same( d) On an annual basis, Option 2 will cost about $820.
You are considering a luxury apartment building project that requires an investment of $14,500,000. The building has 60 units. You expect the maintenance cost for the apartment building to be $450,000 the first year and $490,000 the second year. The maintenance cost will continue to increase by $40,000 in subsequent years. The cost to hire a manager for the building is estimated to be $100,000 per year. After five years of operation, the apartment building can be sold for $18,000,000. What is the annual rent per apartment unit that will provide a return on investment of 17%? Assume that the building will remain fully occupied during its five years of operation. The annual rent per apartment unit should be $ ______thousand. (Round to one decimal place.).
An airline is planning to make iPads® available on some of its Boeing 747 aircrafts with in-flight e-mail and Internet service on transoceanic flights. Passengers on these flights will be able to rent iPads from the airline and use them to browse webs or to send and receive e-mail no matter where they arein the skies. A nominal charge of approximately $30 will be instituted for each rental. The airline has estimated the projected cash flows (in millions of dollars) for the systems in the first 10 aircraft as follows: Determine whether this project can be justified at MARR = 15%, and calculate the annual benefit (or loss) that would be generated after installation of the systems.
An airline is considering two types of engine systems for use in its planes. Each has the same life and the same maintenance and repair record. System A costs $100,000 and uses 38,000 gallons per 1,000 hours of operation at the average load encountered in passenger service. System B costs $340,000 and uses 27,000 gallons per 1,000 hours of operation at the same level. Both engine systems have three-year lives before any major overhaul is required. On the basis of the initial investment, the systems have 1% salvage values. If jet fuel costs $2.32 a gallon (year 1) and fuel consumption is expected to increase at the rate of 10% per year because of degrading engine efficiency, which engine system should the firm install? Assume 3,000 hours of operation per year and a MARR of 11%. Use the AE criterion. What is the equivalent operating cost per hour for each engine? Assume an end-of-year convention for the fuel cost.
A company is considering constructing a plant to manufacture a proposed new product. The land costs P300,000, the building costs P600,000, the equipment costs P250,000 and P100,000 additional working capital is required. It is expected that the product will result in sales of P750,000 per year for 10 years, at which time the land can be sold for P400,000, the building for P350,000 and the equipment for P50,000. All of the working capital would be recovered at the end of year 10. The annual expenses for labor, materials, and all other items are estimated to total P475,000. If the company requires a minimum rate of return of 15% per year on projects of comparable risk, determine if it should invest in the new product line. SOLVE FOR ROR MANUALLY.
A company is considering constructing a plant to manufacture a proposed new product. The land costs P300,000, the building costs P600,000, the equipment costs P250,000 and P100,000 additional working capital is required. It is expected that the product will result in sales of P750,000 per year for 10 years, at which time the land can be sold for P400,000, the building for P350,000 and the equipment for P50,000. All of the working capital would be recovered at the end of year 10. The annual expenses for labor, materials, and all other items are estimated to total P475,000. If the company requires a minimum rate of return of 15% per year on projects of comparable risk, determine if it should invest in the new product line. Evaluate using the following methods: a) RORb) Annual Worth Methodc) Present Worth Methodd) Future Worth Method
Consider a piece of industrial equipment that has an installed cost of $100,000. The equipment is expected to generate $30,000 worth of annual energy savings during the first year of installation. The value of these annual savings is expected to increase at the rate of 5% per year because of increased fuel costs. Assume that the equipment has a service life of five years (or 3,000 operating hours per year) with no appreciable salvage value. Determine the equivalent dollar savings per each operating hour at i = 14%.
Quick Computing currently sells 10 million computer chips each year at a price of $20 per chip. It is about to introduce a new chip, and it forecasts annual sales of 12 million of these improved chips at a price of $25 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 3 million per year. The old chips cost $6 each to manufacture, and the new ones will cost $8 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip? Note: Enter your answer in millions.