Answered: Generator A Generator B Initial…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A pump for a reservoir must be operated continuously (8,760 hours per year). In the event of a large storm, the electricity from the local utility’s power grid may be interrupted for an indefinite period of time. To deal with this emergency situation, two mutually exclusive backup diesel generators are being investigated. One of them will be chosen for implementation. Relevant
data are provided as follows: If salvage values of both generators are negligible and the study period is 60 years, which generator should be chosen? The MARR is 10% per year

Generator A Generator B
Initial investment
$100,000
$130,000
Annual operating
and maint.
9,500
8,000
Useful life, years
15
20

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