5. The average monthly electric bill of a manufacturing plant is P2000. The production manager of the plant figured in increasing the power factor from an average of 70% to 90% by connecting four 15 KVAR power condenser which can be procured at P1500 each and gain a monthly savings of P150. The installation cost is P500, annual maintenance cost of P200. Salvage value is 10% of its initial value for a life of 10 years. If interest is 10% compounded annually, how long will the power condenser pay for themselves?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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5. The average monthly electric bill of a manufacturing plant is P2000. The production manager of the
plant figured in increasing the power factor from an average of 70% to 90% by connecting four 15 KVAR
power condenser which can be procured at P1500 each and gain a monthly savings of P150. The
installation cost is P500, annual maintenance cost of P200. Salvage value is 10% of its initial value for
a life of 10 years. If interest is 10% compounded annually, how long will the power condenser pay for
themselves?
Transcribed Image Text:5. The average monthly electric bill of a manufacturing plant is P2000. The production manager of the plant figured in increasing the power factor from an average of 70% to 90% by connecting four 15 KVAR power condenser which can be procured at P1500 each and gain a monthly savings of P150. The installation cost is P500, annual maintenance cost of P200. Salvage value is 10% of its initial value for a life of 10 years. If interest is 10% compounded annually, how long will the power condenser pay for themselves?
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