The Al Best Company uses a 10-hp motor for 16 hours per day, 5 days per week, 50 weeks per year in its flexible work cell. This motor is 85% efficient, and it is near the end of its useful life. The company is considering buying a new high efficiency motor (91% efficient) to replace the old one instead of buying a standard efficiency motor (86.4% efficient). The high efficiency motor cost $70 more than the standard model, and should have a 15-year life. he company pays $7 per kW per month and $0.06 per kWh. The company has set a discount rate of 10% for their use in comparing projects. Assume the load factor (If) is 60%. Determine the simple payback (SPP).
The Al Best Company uses a 10-hp motor for 16 hours per day, 5 days per week, 50 weeks per year in its flexible work cell. This motor is 85% efficient, and it is near the end of its useful life. The company is considering buying a new high efficiency motor (91% efficient) to replace the old one instead of buying a standard efficiency motor (86.4% efficient). The high efficiency motor cost $70 more than the standard model, and should have a 15-year life. he company pays $7 per kW per month and $0.06 per kWh. The company has set a discount rate of 10% for their use in comparing projects. Assume the load factor (If) is 60%. Determine the simple payback (SPP).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Al Best Company uses a 10-hp motor for 16 hours per day, 5 days per week, 50 weeks per year in its flexible work cell. This motor is 85% efficient, and it is near the end of its useful life.
The company is considering buying a new high efficiency motor (91% efficient) to replace the old one instead of buying a standard efficiency motor (86.4% efficient). The high efficiency motor cost $70 more than the standard model, and should have a 15-year life. he company pays $7 per kW per month and $0.06 per kWh. The company has set a discount rate of 10% for their use in comparing projects. Assume the load factor (If) is 60%. Determine the simple payback (SPP).
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