A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its pur

Question

A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its purchase and installation price is $2,300 A second 30-horsepower high-efficiency motor can be purchased for $3,200, and its efficiency is 94%. Either motor will be operated 4,500 hours per year at full load, and electricity costs S0.10 per kilowatt-hour (kWh). MARR = 18% per year and neither motor will have a market value at the end of the eight-year study period. a. Which motor should be chosen? b. For an incremental investment of $900 in the more efficient motor, what is the PW of the energy savings over the eight-year period? Click the icon to view the interest and annuity table for discrete compounding when i-18% per year. a. The Pw of the motor with the efficiency of 90% is S.. (Round to the nearest dollar)

Explanation / Answer

A / 1 B C D 2 Particulars Motor 3 90% efficiency 94% efficiency 4 Installation cost $2,300 $3,200 5 Full year Hrs                           4,500                       4,500 6 Production Hrs per annum                           4,050                       4,230 7 Hours wasted per annum                              450                           270 8 cost per Hr $0.10 $0.10 9 Total cost $450 $450 10 Cost of produced value $405 $423 11 Idle cost $45 $27 12 MARR per annum 18% 18% 13 Life Years                                   8                               8 14 Present value of idle cost                            (183)                        (110) 15 16 Incremental cost $900 17 Saving in idle cost in 8 years in PV $73.40 18 19 a. though the idle cost is lower in 94% motor it is not advisable as its incremental cost is more 20 b. $73.40 is the savings in 8 years in present value 21 22

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