A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its purchase and installation price is $2,200. A second 30-horsepower high-efficiency motor can be purchased for $3,200, and its efficiency is 93%. Either motor will be operated 4,000 hours per year at full load, and electricity costs $0.10 per kilowatt-hour (kWh). MARR = 15% per year, and neither motor will have a market value at the end of the eight-year study period. Which motor should be chosen by PW method?

A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its purchase and installation price is $2,200. A second 30-horsepower high-efficiency motor can be purchased for $3,200, and its efficiency is 93%. Either motor will be operated 4,000 hours per year at full load, and electricity costs $0.10 per kilowatt-hour (kWh). MARR = 15% per year, and neither motor will have a market value at the end of the eight-year study period. Which motor should be chosen by PW method?

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

Nowadays it is very important to reduce one's carbon "footprint" (how much carbon we produce in our daily lifestyles). Minimizing the use of fossil fuels and instead resorting to renewable sources of energy (e.g., solar energy) are vital to a "sustainable" lifestyle and a lower carbon footprint. Let's consider solar panels that prewarm the water fed to a conventional home water heater. The solar panels have an installed cost of $2,198, and they reduce the homeowner's energy bill by $28.5 per month. The residual value of the solar panels is negligible at the end of their 8-year life. What is the annual effective IRR of this investment? The annual effective IRR of this investment is %. (Round to two decimal places.)
An aerodynamic three-wheeled automobile (the Dart) runs on compressed natural gas stored in two cylinders in the rear of the vehicle. The $12,000 Dart can cruise speeds up to 80 miles per hour, and it can travel 105 miles per gallon of fuel. Another two-seater automobile costs $8,000 and averages 50 miles per gallon of compressed natural useful life of seven years for both cars. If fuel costs $8.75 per gallon and MARR is 8% per year, over what range of annual miles driven is the Dart more economical? Assume a gas.
For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative should you choose? Choice 1: P = $ Choice 2: P = $ Choice 3: P = $ Round entry to the nearest dollar. Tolerance is ±4.
A new office building is expected to produce the initial net operating income (NOI) of $10 at time 1. The NOI is expected to grow 5% per year, and the investor expects an annual IRR of 15%. If the construction cost is $90, what is the land value at time 0?
Two electric motors (A and B) are being considered to drive a centrifugal pump. Each motor is capable of delivering 40 horsepower (output) to the pumping operation. It is expected that the motors will be in use 800 hours per year. If electricity costs $0.08 per kilowatt-hour and 1 hp = 0.746 kW, which motor should be selected if MARR = 6% per year? Refer to the data below. The AW for Motor A is $ Initial Cost Electrical Efficiency Annual Maintenance 5 years Click the icon to view the interest and annuity table for discrete compounding when the MARR is 6% per year. (Round to the nearest dollar.) Motor A $1,700 0.75 $50 Life Motor B $900 0.55 $80 5 years
If that 30% return on investment (ROI) occurs over a decade, r = .55 and n = 10, so the annualized rate of return is 0.0653 0.02658 0.0554 0.0201
A 50-kilowatt gas turbine has an investment cost of $35,000. It costs another $15,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $500 per year. Additionally, the hourly fuel expense for running the turbine is $7.00 per hour, and the turbine is expected to operate 3,500 hours each year. The cost of dismantling and disposing of the turbine at the end of its 6-year life is $9,000. a. If the MARR is 16% per year, what is the annual equivalent life-cycle cost of the gas turbine? b. What percent of annual life-cycle cost is related to fuel? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 16% per year. a. The annual equivalent life-cycle cost of the gas turbine is $ (Round to the nearest dollar.)
Two traffic signal systems are being considered for an intersection. One system costs $31,000 for installation and has an efficiency rating of 80%, requires 26 kW power (output), incurs a user cost of $0.23 per vehicle, and has a life of 9 years. A second system costs $47,000 to install, has an efficiency rating of 87%, requires 34 kW power (output), has a user cost of $0.19 per vehicle, and has a life of 17 years. Annual maintenance costs are $75 and $95, respectively. MARR = 8% per year. How many vehicles must use the intersection to justify the second system when electricity costs $0.09/kWh? Assume salvage value for each system equals zero. Project the difference in the user cost as savings for the second system. There are approximately 8,760 hours/year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. At least 108000 vehicles per day must use the intersection to justify the second system. (Round up to the nearest whole…
Waller County is planning to construct a Dam some tens of miles away from the Hempstead Recreation center to facilitate fishing in the El Manny River Basin and Power Generation. The first cost for the Dam will amount to $6,500,000. Annual maintenance and repairs will amount to $24,000 for the first four years, to $28,000 for each year in the next eight years, and to $32,000 per year for the next four years. At the end of the 16th year, $25,000 is estimated to be deposited into Waller county account as tax credits earned for its environmental compliance in the construction and operation of the Dam. In addition a major overhaul costing $650,000 will be required at the end of the seventh year. Use an interest rate of 10% and : a) Determine the engineering economy symbols and their value for each option. b) Construct the cash flow diagram c) Calculate the Capital Recovery for the project
A large lithium-ion phosphate battery pack for an industrial application is expected to save $20,000 in annual energy expenses over its six-year life. For a three-year simple payback period, the permissible capital investment is $60,000. What is the internal rate of return on this $60,000 battery pack if it has a residual value of $10,000 at the end of six years? The MARR is 18% per year.
A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its purchase and installation price is $2,200. A second 30-horsepower high-efficiency motor can be purchased for $3,200, and its efficiency is 93%. Either motor will be operated 4,000 hours per year at full load, and electricity costs $0.10 per kilowatt-hour (kWh). MARR = 15% per year, and neither motor will have a market value at the end of the eight-year study period. Solve, a. Which motor should be chosen? b. For an incremental investment of $1,000 in the more efficient motor, what is the PW of the energy savings over the eight-year period?
Two electric motors (A and B) are being considered to drive a centrifugal pump. Each motor is capable of delivering 60 horsepower (output) to the pumping operation. It is expected that the motors will be in use 1,200 hours per year. If electricity costs $0.09 per kilowatt-hour and 1 hp = 0.746 kW, which motor should be selected if MARR = 7% per year? Refer to the data below.