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8. Two 30-hp pumps are being considered for use in a manufacturing plant. Pump A has an efficiency of 85%, costs P220 000.00, has a life of 15 years, and a salvage value of P40 000.00. Pump B has an efficiency of 78%, costs P130 000.00, has a life of 15 years, with no salvage value. Power charge is P9/kW-hr and the pump will be operated eight hours a day, 270 days per year. Annual insurance and tax charges are 5%. Determine the pump to be purchased, using PW analysis and a 14% rate of return

8. Two 30-hp pumps are being considered for use in a manufacturing plant. Pump A has an efficiency of 85%, costs P220 000.00, has a life of 15 years, and a salvage value of P40 000.00. Pump B has an efficiency of 78%, costs P130 000.00, has a life of 15 years, with no salvage value. Power charge is P9/kW-hr and the pump will be operated eight hours a day, 270 days per year. Annual insurance and tax charges are 5%. Determine the pump to be purchased, using PW analysis and a 14% rate of return

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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8. Two 30-hp pumps are being considered for use in a manufacturing plant. Pump A has an efficiency of 85%, costs P220 000.00, has a life of 15 years, and a salvage value of P40 000.00. Pump B has an efficiency of 78%, costs P130 000.00, has a life of 15 years, with no salvage value. Power charge is P9/kW-hr and the pump will be operated eight hours a day, 270 days per year. Annual insurance and tax charges are 5%. Determine the pump to be purchased, using PW analysis and a 14% rate of return. (Ans. Purchase Pump A, P3425 790.35 < P3595 893.09)

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